As filed with the Securities and Exchange Commission
on December __, 2000
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Registration No. 333-_______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No. __ |_| Post-Effective Amendment No. __
WARBURG, PINCUS FOCUS FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (212) 875-3000
466 Lexington Avenue
New York, New York 10017-3147
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(Address of Principal Executive Offices) (Zip code)
Hal Liebes, Esq.
Warburg, Pincus Focus Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3147
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Earl D. Weiner Rose F. DiMartino, Esq.
Sullivan & Cromwell Willkie Farr & Gallagher
125 Broad Street 787 Seventh Avenue
New York, NY 10004 New York, NY 10019-6099
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Approximate date of public offering: As soon as practicable following
effectiveness of the Registration Statement.
Title of Securities Being Registered Common Stock, $.001 par value per share.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith in reliance upon Section 24(f).
<PAGE>
CONTENTS OF
REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
<PAGE>
DLJ STRATEGIC GROWTH FUND
Your Vote Is Important
Dear Shareholder:
We are pleased to invite you to attend a special meeting (the "Meeting")
of the shareholders of the Strategic Growth Fund series of the DLJ Select Funds
at which you will be asked to vote on three important matters.
The Board of Trustees of the DLJ Select Funds has recently reviewed and
unanimously endorsed a proposal for the acquisition of its DLJ Strategic Growth
Fund series (the "Fund") by another similar fund managed by your Fund's interim
investment adviser, Credit Suisse Asset Management, LLC ("CSAM"). Under the
terms of the proposal, Warburg, Pincus Focus Fund, Inc. (the "Acquiring Fund")
would acquire all of the assets and liabilities of the Fund. In Proposal Number
1, you are being asked to approve an Agreement and Plan of Reorganization (the
"Plan") pursuant to which the acquisition of the Fund by the Acquiring Fund (the
"Acquisition") would be effected.
The Fund's Board of Trustees and CSAM believe that the Acquisition is in
the best interests of the Fund and its shareholders.
The Acquisition will not result in any material changes to the investment
philosophy or operations of the Fund, since the Fund has a substantially similar
investment objective and similar investment policies as the Acquiring Fund. The
Acquiring Fund has a different transfer agent and independent accountant from
the Fund, but the quality and level of service provided currently to the Fund
and by CSAM's predecessor, DLJ Asset Management Group, Inc. ("DLJAM"), are
expected to continue. Also, CSAM has agreed to reimburse expenses, for the
two-year period beginning on the date of the closing of the Acquisition to the
extent necessary to maintain the average annual expense ratio of the Common
Class of the Acquiring Fund at the lower of that of the average annualized
expense ratio of the Common Class of the Acquiring Fund at the closing of the
Acquisition or the class that such holder will surrender at such closing
measured over the 60-day period ended on the closing of the Acquisition (the
"Closing Date"). The Closing Date is expected to be on or about March 30, 2001.
If shareholders of the Fund approve the Plan, the Fund will be liquidated
upon consummation of the Acquisition. At that time, you will become a
shareholder of the Acquiring Fund, having received shares of the Common Class if
you hold Class A shares, Class B shares, Class C shares or Class R shares in the
Fund with an aggregate net asset value equal to the aggregate net asset value of
your investment in the Fund immediately prior to the Acquisition. No sales or
other charges will be imposed in connection with the Acquisition. The
Acquisition will, in the opinion of counsel, be free from federal income taxes
to you, the Fund and the Acquiring Fund. CSAM or its affiliates will bear all
expenses incurred in connection with the Acquisition.
In Proposal Number 2, you are being asked to approve a new investment
advisory agreement for the Fund with CSAM. This is important for two reasons.
First, assuming shareholders approve the Acquisition, it may take longer than to
March 30, 2001 to close the Acquisition and the rules of the SEC that allow CSAM
to serve as interim investment adviser to the Fund will only let CSAM serve in
that capacity until April 2, 2001. Second, if shareholders do not approve the
Acquisition, CSAM would like to continue as adviser and would not be able to do
so without your approval.
Finally, in Proposal Number 3, you are being asked to elect Trustees to
the Board of Trustees for your Fund. Although we are asking you to approve the
Acquisition and that approval would result in your becoming a shareholder of
another fund with its own board of directors, the Fund is a part of the
<PAGE>
DLJ Select Funds. The DLJ Select Funds is having an election for Trustees and as
shareholders of the DLJ Select Funds, you are entitled to participate in that
election and we strongly recommend that you do so. In the event that
shareholders do not approve the Acquisition, you would continue as a shareholder
of the Fund and the DLJ Select Funds.
The Meeting will be held on March 23, 2001 to consider the Acquisition and
the other matters being presented. We strongly invite your participation by
asking you to review, complete and return your proxy promptly.
Detailed information about the proposals is described in the attached
prospectus/proxy statement. THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF THESE PROPOSALS. On behalf of the Board of
Trustees, I thank you for your participation as a shareholder and urge you to
please exercise your right to vote by completing, dating and signing the
enclosed proxy card(s). A self-addressed, postage-paid envelope has been
enclosed for your convenience; if you prefer, you can fax the proxy card to D.F.
King & Co, Inc., the Fund's proxy solicitor, Attn.: Dominick F. Maurillo, at
(212) 269-2796. We also encourage you to vote by telephone or through the
Internet. Proxies may be voted by telephone by calling 1-(800) 290-6424 between
the hours of 9:00 a.m. and 10:00 p.m. (Eastern time) or through the Internet
using the Internet address located on your proxy card.
Voting by fax, telephone or through the Internet will reduce the time and
costs associated with the proxy solicitation. When the Fund records proxies by
telephone or through the Internet, it will use procedures designed to (i)
authenticate shareholders' identities, (ii) allow shareholders to authorize the
voting of their shares in accordance with their instructions and (iii) confirm
that their instructions have been properly recorded. Shareholders voting via the
Internet should understand that there may be costs associated with electronic
access, such as usage charges from Internet access providers and telephone
companies, that must be borne by the shareholder. We have been advised that
Internet voting procedures that have been made available to you are consistent
with the requirements of applicable law.
Whichever voting method you choose, please read the full text of the proxy
statement before you vote.
If you have any questions regarding the proposed Acquisition, please feel
free to call D.F. King & Co., Inc. at 1-800-290-6424 who will be pleased to
assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY.
Sincerely,
/S/ Martin Jaffe
-----------------------------------
Secretary
__________, 2001
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<PAGE>
________, 2001
DLJ STRATEGIC GROWTH FUND
Important News For Fund Shareholders
While we encourage you to read the full text of the enclosed
Prospectus/Proxy Statement, here is a brief overview of the proposals you are
being asked to vote on.
Q & A: QUESTIONS AND ANSWERS
Q: WHAT IS HAPPENING?
A: Credit Suisse Group ("Credit Suisse") has acquired Donaldson, Lufkin &
Jenrette, Inc. ("DLJ"), including its subsidiary, DLJ Asset Management
Group, Inc. ("DLJAM"), your Fund's prior investment adviser, and has
combined the investment advisory business of DLJAM with its existing U.S.
asset management business, which is managed by Credit Suisse Asset
Management, LLC ("CSAM"). CSAM is part of Credit Suisse Asset Management,
which is the institutional asset management and mutual fund arm of Credit
Suisse, with global assets under management of approximately $198 billion
as of September 30, 2000. Credit Suisse is a global financial services
company, providing a comprehensive range of banking and insurance
products.
To reduce confusion in the marketplace by eliminating multiple, similar
funds advised by the same investment adviser, CSAM is proposing to combine
the assets of the DLJ Strategic Growth Fund (the "Fund") with the Warburg,
Pincus Focus Fund, Inc. (the "Acquiring Fund"), with the Acquiring Fund
surviving the acquisition.
You are being asked to vote on an Agreement and Plan of Reorganization
(the "Plan") for the assets and liabilities of the Fund to be acquired by
the Acquiring Fund in a tax-free exchange of shares (the "Acquisition").
If the Plan is approved and the Acquisition consummated, you would no
longer be a shareholder of the Fund, but would become a shareholder of the
Acquiring Fund.
Q: WHAT ARE THE DIFFERENCES BETWEEN THE FUND AND THE ACQUIRING FUND?
A: The proposed Acquisition will not result in any material changes to the
investment philosophy of the Fund, since the Fund and the Acquiring Fund
have substantially similar investment objectives and similar investment
policies. However, the Acquiring Fund may be subject to additional risks
due to its non-diversified status as it may invest a greater proportion of
its assets in the securities of a smaller number of issuers and due to its
ability to invest in below investment-grade debt. The Acquiring Fund has
the same investment adviser as the Fund. The administrator, transfer agent
and independent accountant will change as a result of the Acquisition.
Q: WILL THE FEES ASSESSED TO SHAREHOLDERS INCREASE?
A: No. CSAM, the Fund's investment adviser, has agreed to reimburse expenses,
for the two year period beginning on the date of the closing of the
Acquisition to the extent necessary to maintain the average annual expense
ratio of each class of the Acquiring Fund at the lower of that of the
average annualized expense ratio of the Acquiring Fund or the average
annualized expense ratio of the class that such holder will surrender at
such closing, measured over the 60-day period ending on the Closing Date.
The closing of the proposed Acquisition is expected to be on or
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<PAGE>
about March 30, 2001. Even if the Plan is not approved the total expense
ratio of your Fund will not increase.
Q: WHAT ARE THE BENEFITS OF THE TRANSACTION?
A: The Board members of your Fund believe that you may benefit from the
proposed Acquisition, in part, because it will result in a single larger
fund with a potentially lower expense ratio and will eliminate confusion
in the marketplace associated with there being two focused equity funds
managed by the same investment adviser. The proposed Acquisition may
result in efficiencies due to a larger asset base. The following pages
give you additional information on the proposed Acquisition on which you
are being asked to vote.
Q: WILL I INCUR TAXES AS A RESULT OF THE TRANSACTION?
A: The Acquisition is expected to be a tax-free event. Generally,
shareholders of the Fund will not incur capital gains or losses on the
conversion from the Fund to the Acquiring Fund.
Shareholders will incur capital gains or losses if they sell their shares
in the Fund before the Acquisition becomes effective or sell or exchange
their Acquiring Fund shares after the Acquisition becomes effective.
Shareholders will also be responsible for tax obligations associated with
periodic dividend and capital gains distributions that occur prior to and
after the Acquisition. The Fund will pay a dividend of any undistributed
net investment income and capital gains, which may be substantial,
immediately prior to the closing date. Please note that retirement
accounts are exempt from such tax consequences.
Q: WHAT HAPPENS IF THE PLAN IS NOT APPROVED?
A: In the event the Plan is not approved, you will continue to be a
shareholder of the Fund and the Board will consider other possible courses
of action available to it, including resubmitting the Acquisition proposal
to shareholders.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT ADVISORY
AGREEMENT?
A. The Investment Company Act of 1940, which regulates investment companies
such as your Fund, requires a shareholder vote to approve a new investment
advisory agreement following certain types of business combinations.
Because the acquisition of DLJ on November 3, 2000 caused the then
existing investment advisory agreement between your Fund and DLJAM to
terminate both pursuant to its terms and the Investment Company Act of
1940, your Board approved an interim investment advisory agreement for the
Fund, which took effect on November 3, 2000 when the Acquisition was
completed. The interim investment advisory agreement has the same fees as
the prior agreement. The interim investment advisory agreement will
continue in effect until the earlier of 150 days from November 3, 2000,
which is April 2, 2001, or until you approve a new investment advisory
agreement between your Fund and CSAM. It is very important that you vote
on this proposal regardless of your vote for or against the Plan as CSAM's
continuing as investment adviser of your Fund requires shareholder
approval of a new investment advisory agreement with your Fund.
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<PAGE>
Q. HOW WILL A NEW INVESTMENT ADVISORY AGREEMENT AFFECT ME AS A FUND
SHAREHOLDER?
A. If the Plan is not approved and the new investment advisory agreement with
CSAM is approved, you will still own the same shares in the same Fund and
CSAM will be the Fund's adviser. The terms of the new investment advisory
agreement are the same in all material respects as the current agreement,
except that CSAM will be the new investment adviser following your
approval and, as more fully explained below, it is anticipated that your
Fund will retain new administrators to provide administrative services
previously provided by DLJAM and CSAM. If the Plan is not approved and
shareholders do not approve the new investment advisory agreement, the
interim investment advisory agreement will terminate and the Board of
Trustees of your Fund will take such action as it deems to be in the best
interests of your Fund and its shareholders.
Q. WILL THE INVESTMENT ADVISORY FEE REMAIN THE SAME UNDER THE NEW INVESTMENT
ADVISORY AGREEMENT IF THE PLAN IS NOT APPROVED?
A. Yes. However, it is proposed, subject to approval by the Board of Trustees
of the Fund, that the administrative services currently provided by CSAM
without additional fees pursuant to the interim advisory agreement to the
Fund will be provided by Credit Suisse Asset Management Securities, Inc.
and an outside administrator to the Fund for a total fee not to exceed
.20% of average daily net assets. In addition, if the Plan is not approved
and CSAM is approved as investment adviser to the Fund, CSAM has agreed to
impose limits on the average annual expense ratio of your Fund in two
ways. First, CSAM has agreed to assume DLJAM's undertaking to limit your
Fund's average annual operating expenses until October 31, 2002. Second,
CSAM has agreed in writing to limit average annual expenses from the date
of the acquisition of DLJ by Credit Suisse, November 3, 2000, until
November 3, 2002 to the annualized levels previously paid by your Fund
measured over the 60-day period ending on November 3, 2000. Consequently,
it is not anticipated that there will be any increase in the average
annual operating expense ratio of your Fund through November 3, 2002 due
to the retention of CSAMSI and the outside administrator as
co-administrators. Consequently, your Fund will not bear any additional
cost through at least November 3, 2002 as a result of the appointment of
the co-administrators.
Q. WHAT ELSE AM I BEING ASKED TO VOTE ON?
A. You are being asked to vote to elect a new Board of Trustees.
Q: HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A: AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES OF YOUR FUND, INCLUDING
THOSE TRUSTEES WHO ARE NOT AFFILIATED WITH THE FUND OR CSAM, RECOMMEND
THAT YOU VOTE FOR THESE PROPOSALS.
Q: WHOM DO I CALL FOR MORE INFORMATION?
A: Please call D.F. King & Co., Inc., the Fund's proxy solicitor, at
1-800-290-6424.
Q: HOW CAN I VOTE MY SHARES?
A: Please choose one of the following options to vote your shares:
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<PAGE>
o By mail, with the enclosed proxy card;
o By telephone, with a toll-free call to the telephone number that
appears on your proxy card or, if no toll-free telephone number
appears on your proxy card, to D.F. King & Co., Inc., the Fund's
proxy solicitor, at 1-800- 290-6424;
o By faxing the enclosed proxy card to D.F. King & Co., Inc. Attn:
Dominick F. Maurillo, at 212-269-2796;
o Through the Internet, by using the Internet address located on your
proxy card and following the instructions on the site; or
o In person at the special meeting.
Q: WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A: No. CSAM or its affiliates will bear these costs.
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<PAGE>
DLJ STRATEGIC GROWTH FUND
277 Park Avenue
New York, New York 10172
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on March 23, 2001
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of DLJ Strategic Growth Fund (the "Fund"), a series of DLJ Select
Funds, will be held at the offices of the Fund, 277 Park Avenue, 24th Floor, New
York, New York 10172 on March 23, 2001, commencing at 10:00 a.m. for the
following purposes:
1. To approve the Agreement and Plan of Reorganization (the "Plan")
providing that (i) the Fund would transfer to Warburg, Pincus Focus
Fund, Inc. (the "Acquiring Fund") all of its assets in exchange for
shares of the Acquiring Fund and the assumption by the Acquiring
Fund of the Fund's liabilities, (ii) such shares of the Acquiring
Fund would be distributed to shareholders of the Fund in liquidation
of the Fund, and (iii) the Fund would subsequently be terminated
(Proposal Number 1);
2. To approve a new investment advisory agreement as it relates to the
Fund permitting Credit Suisse Asset Management, LLC to continue as
investment adviser (Proposal Number 2);
3. To elect eight Trustees to the Board of Trustees of the DLJ Select
Funds (Proposal Number 3); and
4. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
OF THE FUND VOTE TO APPROVE ALL OF THE PROPOSALS.
The Board of Trustees of the DLJ Select Funds has fixed the close of
business on January 31, 2001, as the record date for the determination of
shareholders of the Fund entitled to notice of and to vote at the Meeting and
any adjournment or adjournments thereof. As a convenience to shareholders, you
can now vote in any one of five ways:
o By mail, with the enclosed proxy card(s);
o By telephone, with a toll-free call to the telephone number that
appears on your proxy card or, if no toll-free telephone number
appears on your proxy card, to D.F. King & Co., Inc., the Fund's
proxy solicitor, at 1-800-290-6424;
o By faxing the enclosed proxy card to D.F. King & Co., Inc., Attn:
Dominick F. Maurillo, at 212-269-2796;
o Through the Internet, by using the Internet address located on your
proxy card and following the instructions on the site; or
o In person at the Meeting.
<PAGE>
If you have any questions regarding the proposals, please feel free to
call D.F. King & Co., Inc. at 1-800-290-6424.
It Is Important That Proxies Be Returned Promptly.
By Order of the Board of Trustees
Martin Jaffe
Secretary
__________, 2001
Your Prompt Attention to the Enclosed Proxy Will Help to
Avoid the Expense of Further Solicitation.
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<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to you
and avoid the time and expense involved in validating your vote if you fail to
sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration
on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
4. Registration Valid Signatures
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Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. John Doe
c/o John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr.,
Executor
<PAGE>
Subject to Completion, Dated December __, 2000
PRELIMINARY PROSPECTUS/PROXY STATEMENT
__________, 2001
PROXY STATEMENT
DLJ STRATEGIC GROWTH FUND
277 Park Avenue
New York, New York 10172
(800) 225-8011
PROSPECTUS
WARBURG, PINCUS FOCUS FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
This Prospectus/Proxy Statement is being furnished to shareholders of DLJ
Strategic Growth Fund (the "Fund"), a series of the DLJ Select Funds, an
open-end, management investment company organized as a Delaware business trust,
in connection with the solicitation of proxies by the Board of Trustees of DLJ
Select Funds for use at a Special Meeting of Shareholders to be held on March
23, 2001 at 10:00 a.m. (the "Meeting"), at the offices of the Fund located at
277 Park Avenue, New York, New York 10172, or any adjournment(s) thereof. A list
of the proposals to be considered is set forth below:
1. to approve an agreement and plan of reorganization (the "Plan");
2. to approve a new investment advisory agreement for the Fund;
3. to elect eight Trustees to the Board of Trustees of the DLJ Select
Funds; and
4. to transact such other business as may properly come before the
meeting and any adjournment thereof.
Pursuant to the Plan, the Fund would transfer to Warburg, Pincus Focus
Fund, Inc., an open-end, non-diversified management investment company organized
as a Maryland corporation (the "Acquiring Fund" and, together with the Fund, the
"Funds"), all of its assets in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the Fund's liabilities; such shares of the
Acquiring Fund would be distributed to shareholders of the Fund in liquidation
of the Fund; and the Fund would subsequently be terminated (hereinafter
collectively referred to as the "Acquisition").
The Plan will not result in any material changes in the investment
philosophy of the Fund. The investment objective of the Fund (i.e., long term
growth of capital) is substantially similar to the investment objective and
strategy of the Acquiring Fund (i.e., long term appreciation of capital). The
investment policies of the Acquiring Fund are similar to those of the Fund,
except that the Acquiring Fund is a non-diversified investment company and there
are certain other differences described under "Comparison of Investment
Objectives and Policies" in this Prospectus/Proxy Statement. The investment
adviser for the Acquiring Fund is the same as that of the Fund, although the
administrator, transfer agent and independent accountant will change as a result
of the Acquisition.
As a result of the proposed Acquisition, each shareholder of Class A
shares, Class B shares, Class C shares and Class R shares of the Fund will
receive that number of shares of the Common Class of the Acquiring Fund having
an aggregate net asset value equal to the aggregate net asset value of such
<PAGE>
shareholder's shares of the Fund immediately prior to the Acquisition. All
expenses of the Acquisition and of this solicitation will be borne by CSAM or
its affiliates. No sales or other charges will be imposed on the shares of the
Acquiring Fund received by the shareholders of the Fund in connection with the
Acquisition. This transaction is structured to be tax-free for federal income
tax purposes to shareholders of the Fund and to each of the Fund and the
Acquiring Fund.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Acquiring Fund that a
prospective investor should know before voting. This Prospectus/Proxy Statement
is expected to first be sent to shareholders on or about February 1, 2001. A
Statement of Additional Information dated _________, 2001, relating to this
Prospectus/Proxy Statement and the Acquisition, has been filed with the
Securities and Exchange Commission (the "SEC") and is incorporated by reference
into this Prospectus/Proxy Statement. A copy of such Statement of Additional
Information is available upon oral or written request and without charge by
writing to the Acquiring Fund at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling (800)-WARBURG (800-927-2874).
The following documents, which have been filed with the SEC, are
incorporated herein in their entirety by reference.
o The current Prospectus of the Common Shares of the Acquiring Fund,
dated January 1, 2001, and the current Prospectus of the
Institutional Shares of the Acquiring Fund dated January 1, 2001,
the supplements thereto dated May 2, 2000, August 1, 2000, and
November 22, 2000 and the Shareholder Guide dated February 29, 2000
(as revised March 27, 2000). The Acquiring Fund Prospectus for the
Common Class accompanies this Prospectus/Proxy Statement.
o The current Prospectus of the Fund, dated August 1, 2000 and
supplements thereto dated October 31, 2000, December 1, 2000 and
December 15, 2000. Copies may be obtained without charge by writing
to the address on the cover page of this Prospectus/Proxy Statement
or by calling (800) 225-8011.
o The Annual Report of the Fund for the fiscal year ended October 31,
2000 and of the Acquiring Fund for the fiscal year ended October 31,
2000. The Annual Report of the Acquiring Fund accompanies this
Prospectus/Proxy Statement.
Accompanying this Prospectus/Proxy Statement as Exhibit A is a copy of the
form of the Plan for the proposed Acquisition.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUNDS.
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<PAGE>
TABLE OF CONTENTS
PROPOSAL NUMBER 1 - APPROVAL OF THE PLAN.....................................1
Summary.......................................................................1
Risk Factors..................................................................5
Reasons for the Acquisition...................................................5
Fee Table.....................................................................6
Information About The Acquisition.............................................8
Comparison of Investment Objectives and Policies.............................13
Determination of Net Asset Value of Shares of the Acquiring Fund.............17
Management of Each Fund......................................................18
Interest of CSAM in the Acquisition..........................................18
Information on Shareholders' Rights..........................................19
Conclusion...................................................................20
Required Vote................................................................20
PROPOSAL NUMBER 2 - APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT..........22
Information About DLJAM.....................................................22
The Previous and Interim Investment Advisory Agreement.......................22
Brokerage Commissions........................................................24
The New Investment Advisory Agreement........................................24
Information About CSAM.......................................................25
Section 15(f)................................................................26
Evaluation by the Board......................................................26
Required Vote................................................................27
PROPOSAL NUMBER 3 - ELECTION OF EIGHT TRUSTEES TO THE BOARD OF TRUSTEES......28
ADDITIONAL INFORMATION.......................................................36
VOTING INFORMATION...........................................................36
OTHER BUSINESS...............................................................37
FINANCIAL STATEMENTS AND EXPERTS.............................................37
ADDITIONAL MATERIALS.........................................................38
LEGAL MATTERS................................................................38
EXHIBIT A: AGREEMENT AND PLAN OF REORGANIZATION.............................A-1
EXHIBIT B: FORM OF INVESTMENT ADVISORY AGREEMENT............................B-1
EXHIBIT C: CERTAIN INFORMATION ABOUT CSAM AND
CREDIT SUISSE GROUP..............................................C-1
<PAGE>
PROPOSAL NUMBER 1 -
APPROVAL OF THE PLAN
Summary
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ADDITIONAL
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT, THE PLAN (A
COPY OF THE FORM OF WHICH IS ATTACHED TO THIS PROSPECTUS/PROXY STATEMENT AS
EXHIBIT A), THE PROSPECTUS OF THE FUND, THE STATEMENT OF ADDITIONAL INFORMATION
OF THE FUND, THE PROSPECTUSES OF THE ACQUIRING FUND AND THE STATEMENT OF
ADDITIONAL INFORMATION OF THE ACQUIRING FUND.
Proposed Acquisition. The Plan provides for the acquisition of all of the
assets and liabilities of the Fund by the Acquiring Fund in exchange for shares
of the Acquiring Fund. The Plan also calls for the distribution of shares of the
Acquiring Fund to the Fund's shareholders in liquidation of the Fund. As a
result of the Acquisition, each holder of Class A shares of the Fund, each
holder of Class B shares of the Fund, each holder of Class C shares of the Fund
and each holder of Class R shares of the Fund will become the owner of that
number of full and fractional shares of the Common Class of the Acquiring Fund
having an aggregate net asset value equal to the aggregate net asset value of
the shareholder's shares of the Fund as of the close of business on the date
that the Fund's assets and liabilities are exchanged for shares of the Acquiring
Fund. See "Information About the Acquisition -- Agreement and Plan of
Reorganization."
Because the Fund is a series of the DLJ Select Funds, it does not have a
Board of Trustees separate from the other series of the DLJ Select Funds.
Accordingly, when we refer to the "Trustees of the Fund" or the "Board of
Trustees of the Fund" elsewhere in this prospectus/proxy statement, we mean the
Trustees and the Board of Trustees of the DLJ Select Funds. For the reasons set
forth below under "Reasons for the Acquisition," the Board of Trustees of the
DLJ Select Funds, including the Trustees of the DLJ Select Funds who are not
"interested persons" (the "Independent Trustees"), as that term is defined in
the Investment Company Act of 1940, as amended (the "1940 Act"), has unanimously
concluded that the Acquisition would be in the best interests of the
shareholders of the Fund and that the interests of the Fund's existing
shareholders will not be diluted as a result of the transaction contemplated by
the Acquisition. The Board therefore has submitted the Plan for approval by the
Fund's shareholders. The Board of Directors of the Acquiring Fund has also
reached similar conclusions and approved the Acquisition with respect to the
Acquiring Fund.
Approval of the Acquisition of the Fund will require the affirmative vote
of a majority of the Fund's outstanding shares, in the aggregate without regard
to class, present in person or represented by proxy. See "Voting Information."
In the event that the Plan is not approved by shareholders of the Fund, the
Board will consider other possible courses of action available to it, including
resubmitting the Acquisition proposal to shareholders.
Tax Consequences. Prior to completion of the Acquisition, the Fund and the
Acquiring Fund will have received an opinion of counsel that, upon the closing
of the Acquisition and the transfer of the assets of the Fund, no gain or loss
will be recognized by the Fund or its shareholders for federal income tax
purposes. The holding period and aggregate tax basis of the Acquiring Fund
shares received by a Fund shareholder will be the same as the holding period and
aggregate tax basis of the shares of the Fund previously held by such
shareholder. In addition, the holding period and aggregate tax basis of the
assets of the Fund in the hands of the Acquiring Fund as a result of the
Acquisition will be the same as in the hands of the Fund immediately prior to
the Acquisition.
<PAGE>
Investment Objectives And Policies. The investment objective and strategy
of the Acquiring Fund (i.e., long-term appreciation of capital) is substantially
similar to the investment objective of the Fund (i.e., long-term growth of
capital). The investment policies of the Acquiring Fund are similar to those of
the Fund although the Acquiring Fund is subject to additional risks due to (i)
its non-diversified status and (ii) its ability to invest in below
investment-grade debt. The other investment policies of the Acquiring Fund are
similar to those of the Fund except for differences noted below under
"Comparison of Investment Objectives and Policies." Except as noted below under
"Comparison of Investment Objectives and Policies," each Fund has similar
fundamental and non-fundamental investment limitations.
Purchase And Redemption Procedures. Except as otherwise indicated in this
section, the Funds have substantially similar policies with respect to
purchases, redemptions and exchanges of shares. Class A shares, Class B shares
or Class C shares of the Fund may be purchased directly from the Fund, through
the Fund's distributor or through selected dealers. Class R shares of the Fund
are offered only to eligible institutions who purchase shares on behalf of their
clients and are not available to individual investors directly. The Acquiring
Fund's Common Class shares may be purchased from the Fund's distributor and
various financial intermediaries. Class A shares, Class B shares and Class C
shares of the Fund require a minimum initial investment of $1,000, and minimum
additional investments of $25. These minimums are waived for certain types of
accounts. Shares of the Common Class of the Acquiring Fund require a minimum
initial investment of $2,500, and a minimum additional investment of $100 if
made by check, although this amount varies based on the method of payment. The
Fund requires holders of Class A shares, Class B shares or Class C shares to
maintain a minimum account size of $250, whereas the Acquiring Fund requires
holders of the Common Class to maintain a minimum account size of $2,000.
However, CSAM has agreed to waive minimum account size requirements for
shareholders of the Fund who are currently below applicable minimum account size
requirements.
Like holders of Class A shares, Class B shares and Class C shares of the
Fund, holders of the Common Class of the Acquiring Fund may redeem their shares
by telephone for accounts with such privileges. Both Funds require that requests
for redemptions of large amounts be made in writing and be accompanied by a
signature guarantee.
In addition, both Funds offer automatic investment and withdrawal
programs. The Fund's automatic investment program requires a minimum purchase of
$25 on Class A shares, Class B shares or Class C shares on a regular basis. The
Acquiring Fund's Common Class offers an automatic monthly investment plan, which
requires a $50 minimum on purchases of Common Class shares. The Acquiring Fund
also offers an automatic withdrawal plan for making automatic periodic
withdrawals of $250 or more. The Fund's automatic withdrawal plan is available
to holders of Class A shares, Class B shares or Class R Shares with a current
net asset value of at least $10,000. Such shareholders may receive, or designate
a third party to receive, periodic payment by check in an amount not less than
$50.
You should note that while holders of Class A shares, Class B shares or
Class C shares of the Fund have available the "Automatic Exchange Plan" and the
"Dividend Direction Option," the Acquiring Fund does not offer similar programs
to holders of its Common Class of shares. Shareholders of the Fund who currently
participate in the Dividend Direction Option will have dividends reinvested in
the form of additional full and fractional shares of the relevant Fund unless a
shareholder elects otherwise. Any sales charges to a purchase or redemption are
discussed below under "Sales Charges".
You should also note that certain brokers who distribute shares of the
Fund may not distribute shares of the Acquiring Fund. The Prospectuses of the
Acquiring Fund provide additional information on purchasing shares of the
Acquiring Fund.
-2-
<PAGE>
Sales Charges. Class A shares of the Fund are sold at net asset value per
share with an initial sales charge of 5.75% which declines for larger purchases
and is zero for purchases over $1 million and are subject to a 12b-1 fee of
0.25% per annum of average daily net assets. Class B shares of the Fund are sold
without an initial sales charge but may be subject to a contingent deferred
sales charge ("CDSC") of 4.00% for redemptions in the first year after purchase
and declines by 1.00% annually to zero for redemptions made after the fourth
year and are subject to a 12b-1 fee of 1.00% per annum of average daily net
assets. Class C shares are sold at net asset value per share without an initial
sales charge but are subject to a CDSC of 1.00% if shares are redeemed within
one year and are subject to a 12b-1 fee of 1.00% per annum of average daily net
assets. Class R shares are sold at net asset value per share without an initial
sales charge or CDSC but are only sold to eligible institutions who purchase
shares on behalf of their clients and are not available to individual investors
directly and are subject to a 12b-1 fee of 0.25% of average daily net assets.
Shares of the Acquiring Fund are sold at net asset value per share and without
an initial sales charge or CDSC. Shareholders of the Fund who hold Class B or
Class C shares of the Fund, however, who receive Common class shares of the
Acquiring Fund as part of the Acquisition will continue to be subject to the
CDSC that would otherwise be applicable to such Class B or Class C shares.
Common Shares of the Acquiring Fund are subject to a 12b-1 fee of 0.25% per
annum. Importantly, the Fund has a reimbursement type distribution plan while
the Acquiring Fund has a [compensation] type plan. In a compensation plan, the
distributor receives the distribution fee regardless of the cost of the
distribution activities performed. In a reimbursement plan, the amounts payable
under the distribution plan are directly related to the expenses actually
incurred by the distributor for its distribution activities. See "Fee Table"
below.
Exchange Privileges. The exchange privileges available to shareholders of
the Acquiring Fund are similar to those available to shareholders of the Fund.
Shareholders of each Fund may exchange at net asset value all or a portion of
their shares for shares of the same class of other mutual funds in their
respective family of funds at their respective net asset values. Exchanges may
be effected by mail or by telephone. Exchanges will be effected without a sales
charge but must satisfy the minimum dollar amount necessary for new purchases in
the fund in which shares are being purchased. Each of the Fund and the Acquiring
Fund may refuse exchange purchases at any time without prior notice. The
exchange privilege may be modified or terminated at any time upon 30-days'
notice to shareholders.
The exchange privilege is available to shareholders residing in any state
in which the relevant fund's shares being acquired may legally be sold. When an
investor effects an exchange of shares, the exchange is treated for federal
income tax purposes as a redemption. Therefore, the investor may realize a
taxable gain or loss in connection with the exchange. No initial sales charge is
imposed on the shares being acquired in an exchange. See the Shareholder Guide
which accompanies the Prospectuses of the Acquiring Fund.
Dividends. The Acquiring Fund and the Fund each distribute substantially
all of their respective net investment income and net realized capital gains, if
any, to their respective shareholders. All distributions are reinvested in the
form of additional full and fractional shares of the relevant Fund unless a
shareholder elects otherwise. Each Fund declares and pays dividends, if any,
from net investment income annually. Net realized capital gains (including net
short-term capital gains), if any, of each Fund will be distributed at least
annually. It is expected that the Fund will pay a dividend of any undistributed
net investment income and capital gains, which may be substantial, immediately
prior to the Closing Date. See "About Your Account -- Distributions" in the
accompanying Prospectus(es) of the Acquiring Fund.
Shareholder Voting Rights. The Acquiring Fund and the Fund are each
registered with the SEC as open-end and, in the case of the Acquiring Fund, as
non-diversified, management investment companies. The Acquiring Fund is a
Maryland corporation, having a Board of Directors. The Fund is a
-3-
<PAGE>
series of a Delaware business trust with a Board of Trustees. Shareholders of
each Fund have similar voting rights. Neither Fund holds a meeting of
shareholders annually, except as required by the 1940 Act or other applicable
law. The Acquiring Fund's By-Laws provide that a special meeting of shareholders
will be called at the written request of shareholders entitled to cast at least
ten percent of the votes entitled to be cast at the meeting. Payment by such
shareholders of the reasonably estimated cost of preparing and mailing a notice
of the meeting is required in advance of the meeting, provided, however, that
the matter to be considered at such special meeting of shareholders is not
substantially the same as a matter voted on at a special meeting of shareholders
held during the preceding 12 months. The Fund's Agreement and Declaration of
Trust provides that a special meeting of shareholders will be called at the
written request of shareholders holding at least 51% of the outstanding shares
of the Fund. To the extent required by law, each Fund will assist in shareholder
communications in such matters. The presence of one-third of the votes to be
cast at a shareholder meeting of the Acquiring Fund will constitute a quorum
whereas the presence of a majority of shares of the Fund at a meeting will
constitute a quorum.
Under the laws of the State of Delaware, shareholders of the Fund do not
have appraisal rights in connection with a combination or acquisition of the
assets of the Fund by another entity, such as the Acquiring Fund. In addition,
under the laws of the State of Maryland, shareholders of the Acquiring Fund do
not have appraisal rights in connection with a combination or acquisition of the
assets of the Acquiring Fund by another entity. Shareholders of the Fund may,
however, redeem their shares at net asset value prior to the date of the
Acquisition (subject only to certain restrictions set forth in the 1940 Act).
See "Information on Shareholders' Rights -- Voting Rights."
-4-
<PAGE>
Risk Factors
Due to the fact that the investment objectives of the Acquiring Fund
(i.e., long term appreciation of capital) and the Fund (i.e., long term growth
of capital) are substantially similar and the investment policies and
restrictions of the Acquiring Fund are, except as noted herein, similar to those
of the Fund, the investment risks are also similar, although the Acquiring Fund
is subject to additional risks due to (i) its non-diversified status and (ii)
its ability to invest in below investment-grade debt. The principal risk factors
affecting both the Fund and the Acquiring Fund are market risk and, in the case
of the Acquiring Fund, non-diversified status. The Acquiring Fund has greater
exposure to the risks associated with (i) concentrating investments in a single
issuer, as it is permitted to invest a greater proportion of its assets in the
securities of a smaller number of issuers than the Fund; (ii) investing in
below-investment grade debt as the Acquiring Fund, unlike the Fund, may invest
in such securities; (iii) the ability to engage in a broader range of option and
hedging strategies, as the Fund may only engage in such strategies in more
limited circumstances compared to the Acquiring Fund; and (iv) the ability to
invest a greater percentage of its assets in foreign securities -- 35% for the
Acquiring Fund, compared to 10% for the Fund. As a result, the Acquiring Fund
may be subject to greater volatility with respect to its portfolio securities
than the Fund. See the accompanying Prospectus(es) of the Acquiring Fund for a
complete discussion of the risks of investing in that Fund.
Reasons for the Acquisition
The Board of Trustees of the Fund has unanimously determined that it is in
the best interest of the Fund to effect the Acquisition. In reaching this
conclusion, the Board considered a number of factors, including the following:
1. the Acquisition will result in a single larger fund, thereby
eliminating confusion in the marketplace associated with there being
two focused equity funds managed by CSAM;
2. the Acquisition may increase efficiencies, eliminating one of the
two sets of prospectuses, annual reports and other documents
required for two funds;
3. a larger asset base could provide portfolio management benefits,
such as greater diversification to mitigate the risks of investing
in a limited number of equity securities and the ability to command
more attention from brokers and underwriters of portfolio
securities;
4. the performance record of the Acquiring Fund;
5. the terms and conditions of the Acquisition;
6. the substantially similar investment objective and similar
investment policies and restrictions of the Acquiring Fund in
relation to those of the Fund;
7. that the investment adviser for the Acquiring Fund is the same as
that of the Fund;
8. the federal tax consequences of the Acquisition to the Fund, the
Acquiring Fund and the shareholders of each Fund, and that a legal
opinion will be rendered that no recognition of gain or loss for
federal income tax purposes will occur as a result of the
Acquisition to any of them;
9. the possibility of alternative transactions, including the
possibility of a transaction with a fund that is not managed by
CSAM;
-5-
<PAGE>
10. that the interests of shareholders of the Fund will not be diluted
as a result of the Acquisition;
11. CSAM has agreed to reimburse expenses, for the two-year period
beginning on the date of the closing of the Acquisition to the
extent necessary to maintain the average annual expense ratio of the
Common Class of the Acquiring Fund at the lower of that of the
average annualized expense ratio of Class A shares, Class B shares,
Class C shares and Class R shares of the Fund and the average
annualized expense ratio of the Common Class measured over the
60-day period ending on the Closing Date;
12. that the expenses of the Acquisition will be borne by CSAM or its
affiliates; and
13. that no sales or other charges will be imposed in connection with
the Acquisition.
In light of the foregoing, the Board of Trustees of the Fund, including
the Independent Trustees, has determined that it is in the best interests of the
Fund and its shareholders to effect the Acquisition. The Board of Trustees of
the Fund has also determined that the Acquisition would not result in a dilution
of the interests of the Fund's shareholders.
The Board of Directors of the Acquiring Fund has also determined that it
is advantageous to the Acquiring Fund to effect the Acquisition. The Acquiring
Fund's Board of Directors considered, among other things, the terms and
conditions of the Acquisition and representations that the Acquisition would be
effected as a tax-free reorganization. Accordingly, the Board of Directors of
the Acquiring Fund, including a majority of the Independent Directors, has
determined that the Acquisition is in the best interests of the Acquiring Fund's
shareholders and that the interests of the Acquiring Fund's shareholders would
not be diluted as a result of the Acquisition.
Fee Table
Following is a table showing current fees and expenses of the Class A
shares, Class B shares, Class C shares and Class R shares of the Fund, holders
of which will receive the Common Class of the Acquiring Fund upon closing of the
Acquisition and the costs and expenses of the Common Class of the Acquiring Fund
before and after giving effect to the Acquisition. The table does not reflect
charges that institutions and financial intermediaries may impose on their
customers.
Before Fee Waivers And Reimbursements
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Acquiring
Fund Fund Pro Forma
------------------------------------------ --------- (Common
Common Class After
Class A* Class B* Class C* Class R* Class** Acquisition)
-------- -------- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum sales charge imposed on
purchases (as a percentage of offering
price) 5.75% None None None None None
----------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (as a
percentage of original purchase price,
or redemption proceeds, as applicable) None 4%*** 1%**** None None None
----------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management fees 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 fees 0.25% 1.00% 1.00% 0.25% 0.25% 0.25%
Other expenses 2.06% 2.06% 2.06% 2.06% 2.12% 1.42%
----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses***** 3.06% 3.81% 3.81% 3.06% 3.12% 2.42%
----------------------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
After Fee Waivers And Reimbursements
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Acquiring
Fund Fund Pro Forma
------------------------------------------ --------- (Common
Common Class After
Class A* Class B* Class C* Class R* Class** Acquisition)
-------- -------- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum sales charge imposed on
purchases (as a percentage of offering
price) 5.75% None None None None None
-----------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (as a
percentage of original purchase price,
or redemption proceeds, as applicable) None 4%*** 1%**** None None None
-----------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management fees 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12b-1 fees 0.25% 1.00% 1.00% 0.25% 0.25% 0.25%
Other expenses 0.94% 0.94% 0.94% 0.94% 1.04% 0.94%
Total Annual Fund Operating Expenses***** 1.19% 1.94% 1.94% 1.19% 1.29% 1.19%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
----------
* Actual fees and expenses for the year ended October 31, 2000 are shown
below. Fee waivers and expense reimbursements or credits reduced expenses
for the Funds during that period but may be discontinued at any time after
October 31, 2001.
** Actual fees and expenses for the year ended August 31, 2000.
*** 4% in the first year after purchase, declining annually by 1% to zero
after the fourth year. Following the Acquisition, shareholders of the Fund
holding Class B or Class C shares who receive Common Class shares will
remain subject to the CDSC that would have been applicable to their Class
B or Class C shares.
**** During the first year after purchase only.
***** CSAM and CSAMSI, as applicable, have agreed to waive fees, and CSAM has
agreed to reimburse expenses, for the two-year period beginning on the
date of the closing of the Acquisition until November 3, 2002 to the
extent necessary to maintain the average annual expense ratio of the
Common Class of the Acquiring Fund at the lower of that of the average
annualized expense ratio of Class A shares, Class B shares, Class C shares
and Class R shares of the Fund and the average annualized expense ratio of
the Common Class measured over the 60-day period ended on the Closing
Date.
Examples
The following examples are intended to assist an investor in understanding the
various costs that an investor in each Fund will bear directly or indirectly.
The examples assume payment of operating expenses at the levels set forth in the
second table above (i.e., after fee waivers and expense reimbursements). The
examples also assume that all dividends and distributions are reinvested.
-7-
<PAGE>
--------------------------------------------------------------------------------
Assume you invest $10,000, each Fund returns 5% annually and you close your
account at the end of each of the time periods shown. Based on these
assumptions, your cost would be:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund CDSC Fee Assumptions
---------------------------------- Acquiring --------------------
Class A Class B(1)(2) Class C(3) Class R Fund Pro Forma Class B Class C
------- ------------- ---------- ------- ---- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Shares
1 Year $ 689 $ 197 $ 197 $ 121 $ 315 $ 121 $ 521 $ 221
3 Year 1300 992 992 769 963 511 711 511
5 Year 1934 1805 1805 1442 1635 1060 1060 1060
10 Year 3631 3761 3926 3242 3430 2561 2561 2561
</TABLE>
----------
(1) Class B shares of the Fund automatically convert to Class A shares after
eight years. The effect of the automatic conversion feature is reflected
in the Examples set forth above.
(2) Assumes no redemption at the end of period. In the example above, if the
Class B shares were redeemed after 1 year, your costs would be $597 and
after 3 years, your costs would be $1192. Costs for the other time periods
would remain the same.
(3) Assumes no redemption at the end of period. In the example above, if the
Class C shares were redeemed after 1 year, your costs would be $297. Costs
for the other time periods would remain the same.
The examples provide a means for an investor to compare expense levels of
funds with different fee structures over varying investment periods. To
facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, each Fund's actual return will vary and may be
greater or less than 5.00%. These examples should not be considered
representations of past or future expenses and actual expenses may be greater or
less than those shown.
Information About The Acquisition
Agreement and Plan of Reorganization. The following summary of the Plan is
qualified in its entirety by reference to the form of Plan (Exhibit A hereto).
The Plan provides that the Acquiring Fund will acquire all of the assets of the
Fund in exchange for shares of the Acquiring Fund and the assumption by the
Acquiring Fund of the liabilities of the Fund on the Closing Date. The Closing
Date is expected to be on or about March 30, 2001.
Prior to the Closing Date, the Fund will endeavor to discharge all of its
known liabilities and obligations, other than those liabilities and obligations
which would otherwise be discharged at a later date in the ordinary course of
business. The Acquiring Fund will assume all liabilities, expenses, costs,
charges and reserves, including those liabilities reflected on an unaudited
statement of assets and liabilities of the Fund, as of the close of regular
trading on The New York Stock Exchange, Inc., currently 4:00 p.m. New York City
time, on the Closing Date, in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The net asset
value per share of each class of each Fund will be calculated by determining the
total assets attributable to such class, subtracting the relevant class' pro
rata share of the actual and accrued liabilities of a Fund and the liabilities
specifically allocated to that class of shares, and dividing the result by the
total number of outstanding shares of the relevant class. Each Fund will utilize
the procedures set forth in its respective current Prospectus(es) or Statement
of Additional Information to determine the value of their respective portfolio
securities and to determine the aggregate value of each Fund's portfolio.
On or as soon after the Closing Date as conveniently practicable, the Fund
will liquidate and distribute pro rata to shareholders of record as of the close
of business on the Closing Date the shares of
-8-
<PAGE>
the Common Class of the Acquiring Fund received by the Fund. Such liquidation
and distribution will be accomplished by the establishment of accounts in the
names of the Fund's shareholders on the share records of the Acquiring Fund's
transfer agent. Each account will represent the number of shares of the relevant
class of shares of the Acquiring Fund due to each of the Fund's shareholders
calculated in accordance with the Plan. After such distribution and the winding
up of its affairs, the Fund will terminate as a management investment company
and dissolve as a series of the DLJ Select Funds.
The consummation of the Acquisition is subject to the conditions set forth
in the Plan, including approval of the Plan by the shareholders of the Fund.
Notwithstanding approval by the shareholders of the Fund, the Plan may be
terminated at any time at or prior to the Closing Date: (i) by mutual agreement
of the Fund and the Acquiring Fund; (ii) by the Fund in the event the Acquiring
Fund shall, or by the Acquiring Fund, in the event the Fund shall, materially
breach any representation, warranty or agreement contained in the Plan to be
performed at or prior to the Closing Date; or (iii) if a condition to the Plan
expressed to be precedent to the obligations of the terminating party has not
been met and it reasonably appears that it will not or cannot be met within a
reasonable time.
Pursuant to the Plan, the Acquiring Fund has agreed to indemnify and
advance expenses to each Trustee or officer of the Fund against money damages
incurred in connection with any claim arising out of such person's services as a
Trustee or officer with respect to matters specifically relating to the
Acquisition.
Approval of the Plan with respect to the Fund will require the affirmative
vote of a majority of the Fund's outstanding shares in the aggregate without
regard to class, in person or by proxy, if a quorum is present. Shareholders of
the Fund are entitled to one vote for each share. If the Acquisition is not
approved by shareholders of the Fund, the Board of Trustees of the Fund will
consider other possible courses of action available to it, including
resubmitting the Acquisition proposal to shareholders.
Description of the Acquiring Fund Shares. Shares of the Acquiring Fund
will be issued to the Fund in accordance with the procedures detailed in the
Plan and as described in the Acquiring Fund's Prospectuses and Shareholder
Guide. The Acquiring Fund, like the Fund, will not issue share certificates to
its shareholders. See "Information on Shareholders' Rights" and the Prospectuses
of the Acquiring Fund for additional information with respect to the shares of
the Acquiring Fund.
The Acquiring Fund has authorized three classes of common stock, called
Common Shares, Institutional Shares and Advisor Shares. Common Class shares of
the Acquiring Fund will be issued to holders of Class A, Class B, Class C and
Class R shares of the Fund. The Acquiring Fund intends to continuously offer
Common Shares and Institutional Shares after consummation of the Acquisition.
Institutional Shares are generally available only to investors who have entered
into an investment management agreement with CSAM. Shares of each class of the
Acquiring Fund represent equal pro rata interests in the Acquiring Fund and
accrue dividends and calculate net asset value and performance quotations in the
same manner.
Federal Income Tax Consequences. The exchange of assets of the Fund for
shares of the Acquiring Fund, followed by the distribution of these shares, is
intended to qualify for federal income tax purposes as a tax-free reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). As a condition to the closing of the Acquisition, the Acquiring Fund
and the Fund will receive an opinion from Willkie Farr & Gallagher, counsel to
the Acquiring Fund, to the effect that, on the basis of the existing provisions
of the Code, U.S. Treasury regulations issued thereunder, current administrative
rules, pronouncements and court decisions, for federal income tax purposes, upon
consummation of the Acquisition:
-9-
<PAGE>
(1) the transfer of all of the Fund's assets in exchange for the Acquiring
Fund shares and the assumption by the Acquiring Fund of the liabilities of the
Fund, and the distribution of the Acquiring Fund shares to the shareholders of
the Fund in exchange for their shares of the Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and the
Acquiring Fund and the Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code;
(2) no gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Fund solely in exchange for the Acquiring Fund
shares and the assumption by the Acquiring Fund of the liabilities of the Fund;
(3) no gain or loss will be recognized by the Fund upon the transfer of
the Fund's assets to the Acquiring Fund in exchange for the Acquiring Fund
shares and the assumption by the Acquiring Fund of the liabilities of the Fund
or upon the distribution of the Acquiring Fund shares to the Fund's
shareholders;
(4) no gain or loss will be recognized by shareholders of the Fund upon
the exchange of their shares for Acquiring Fund shares or upon the assumption by
the Acquiring Fund of the liabilities of the Fund;
(5) the aggregate tax basis of the Acquiring Fund shares received by each
shareholder of the Fund pursuant to the Acquisition will be the same as the
aggregate tax basis of shares of the Fund held by such shareholder immediately
prior to the Acquisition, and the holding period of Acquiring Fund shares to be
received by each shareholder of the Fund will include the period during which
shares of the Fund exchanged therefor were held by such shareholder (provided
that such shares of the Fund were held as capital assets on the date of the
Acquisition); and
(6) the tax basis of the Fund's assets acquired by the Acquiring Fund will
be the same as the tax basis of such assets to the Fund immediately prior to the
Acquisition, and the holding period of the assets of the Fund in the hands of
the Acquiring Fund will include the period during which those assets were held
by the Fund.
You should recognize that an opinion of counsel is not binding on the
Internal Revenue Service ("IRS") or any court. Neither the Fund nor the
Acquiring Fund will seek to obtain a ruling from the IRS regarding the tax
consequences of the Acquisition. Accordingly, if the IRS sought to challenge the
tax treatment of the Acquisition and was successful, neither of which is
anticipated, the Acquisition could be treated, in whole or in part, as a taxable
sale of assets of the Fund, followed by the taxable liquidation thereof.
Shareholders of the Fund should consult their tax advisors regarding the
effect, if any, of the proposed Acquisition in light of their individual
circumstances. Since the foregoing discussion only relates to the federal income
tax consequences of the Acquisition, shareholders of the Fund should also
consult their tax advisors as to state and local tax consequences, if any, of
the Acquisition.
Capitalization. The following table shows the capitalization of the Fund
as of October 31, 2000 and the Acquiring Fund as of August 31, 2000 and the
capitalization of the Acquiring Fund on a pro forma basis as of the Closing
Date, after giving effect to the Acquisition.(1)
-10-
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Fund Acquiring Fund Adjustment Pro Forma
----------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net Assets -- Fund Level $8,759,486 $13,415,646 $ 8,759,486 $22,175,132
Common -- 2,757,676 8,759,486 11,517,162
Institutional -- 10,657,970 -- 10,657,970
Class A 99,478 -- (99,478) --
Class B 359,117 -- (359,117) --
Class C 38,306 -- (38,306) --
Class R 8,262,585 -- (8,262,585) --
Net Asset Value
Common -- $ 19.13 -- $ 19.13
Institutional -- 19.25 -- 19.25
Class A $ 10.93 -- $ (10.93) --
Class B 10.93 -- (10.93) --
Class C 10.93 -- (10.93) --
Class R 10.94 -- (10.94) --
Shares Outstanding
Common -- 144,126 457,802 601,928
Institutional -- 553,587 -- 553,587
Class A 9,097 -- (9,097) --
Class B 32,864 -- (32,864) --
Class C 3,504 -- (3,504) --
Class R 755,256 -- (755,256) --
</TABLE>
----------
(1) Assumes the Acquisition had been consummated on October 31, 2000 and is
for information purposes only. No assurance can be given as to how many
Acquiring Fund shares will be received by shareholders of the Fund on the
date the Acquisition takes place, and the foregoing should not be relied
upon to reflect the number of Acquiring Fund shares that actually will be
received on or after such date.
Total Returns
Total return is a measure of the change in value of an investment in a
fund over the period covered, which assumes that any dividends or capital gains
distributions are automatically reinvested in shares of the fund rather than
paid to the investor in cash. The formula for total return used by a fund is
prescribed by the SEC and includes three steps: (1) adding to the total number
of shares of the fund that would be purchased by a hypothetical $1,000
investment in the fund all additional shares that would have been purchased if
all dividends and distributions paid or distributed during the period had been
automatically reinvested; (2) calculating the redeemable value of the
hypothetical initial investment as of the end of the period by multiplying the
total number of shares owned at the end of the period by the net asset value per
share on the last trading day of the period; and (3) dividing this account value
for the hypothetical investor by the amount of the initial investment, and
annualizing the result for periods of less than one year. Total return may be
stated with or without giving effect to any expense limitations in effect for a
fund.
The following table reflects the average annual total return for the
1-year and since inception periods ending October 31, 2000 for each Fund:
<TABLE>
<CAPTION>
Fund(2) Acquiring Fund(3)
------------------------------------- ---------------------
Class A Class B Class C Class R Common Institutional
------- ------- ------- ------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return(1)
1-year n/a n/a n/a n/a 30.01% 29.34
Since Inception n/a n/a n/a n/a 29.34% 29.68
</TABLE>
-11-
<PAGE>
n/a = Not disclosed as the classes were not in existence during all of the
period indicated.
----------
(1) If CSAM or its predecessor had not temporarily waived fees and reimbursed
expenses, the cumulative total return of each Fund for the one-year period
and since inception would have been lower.
(2) Inception Date November 18, 1999 (commencement of operations).
(3) Inception Date November 2, 1998 for Common Class and August 3, 1998 for
Institutional Class.
-12-
<PAGE>
Share Ownership of the Funds
As of January 31, 2001 (the "Record Date"), the officers, Trustees or
Directors of the Fund and the Acquiring Fund beneficially owned as a group less
than 1% of the outstanding securities of the relevant Fund. To the best
knowledge of a Fund, as of the Record Date, no shareholder or "group" (as that
term is used in Section 13(d) of the Securities Exchange Act of 1934 (the "1934
Act")), except as set forth below, owned beneficially or of record more than 5%
of the outstanding shares of a class of the Fund.
<TABLE>
<CAPTION>
Name Percent Owned as of Record Date
---- -------------------------------
Acquiring Fund Common Institutional
<S> <C> <C>
Ocean View Memorial Foundation* 27.03% n/a
Charles Schwab & Co.* 18.02% n/a
William Holden Wildlife Foundation* 6.96% n/a
State Street IRA* FBO Spencer Marsch 5.52% n/a
The Regional Medical Center of Orangeburg & Colhound n/a 54.76%
County*
Trustlynx & Co.* n/a 17.62%
Huntington Hospital Endowment* n/a 13.60%
Chase Manhattan Bank DCA/MMF* n/a 8.10%
<CAPTION>
Fund Class A Class B Class C Class R
<S> <C> <C> <C> <C>
Donald Macdonald 15.55%
Karen Smith IRA 15.34%
Robert W. Ahola 14.91%
Norman Hormozl 11.21%
Olive Jacobson 6.53%
Frank Navarro Money Purchase Plan* 5.63%
G.M. Cochran V Cust Elisabeth P Cochran* 22.44%
Bryan & Sara Foulk* 20.03%
G.M. Cochran V Cust Lee Cochran II* 14.97%
Weiman Shi & Xianjun Kong 8.84%
Wendy Martin IRA 7.96%
Robert & Jane Oliver 5.76%
Jay Hufford IRA 38.88%
Alice M. Liey Trust 36.63%
Pamela T. Vand 17.06%
Henry Gibbans-Neff Jr. 7.27%
DLJ Asset Management Group* 6.82%
</TABLE>
* Each Fund believes these entities are not the beneficial owners of shares
held of record by them.
Comparison of Investment Objectives and Policies
The following discussion is based upon and qualified in its entirety by
the disclosures in the respective Prospectuses and Statements of Additional
Information of the Acquiring Fund and the Fund.
-13-
<PAGE>
Investment Objectives. As stated above each Fund has a substantially
similar investment objective. There can be no assurance that either Fund will
achieve its investment objective.
Primary Investments. Each Fund seeks to achieve its investment objective
by investing primarily in equity securities of a limited number of companies.
The Fund and the Acquiring Fund seek to invest in equity securities in U.S.
companies at least 85% and 65% of their assets, respectively (under normal
conditions). Each Fund intends to hold securities of a similar and relatively
small number of companies, which for the Fund and the Acquiring Fund is in the
range of 50-60 and 40-60, respectively. The Fund selects companies that the
Adviser believes will achieve superior growth. These companies tend to be in the
technology, health care, consumer, financial, telecommunications and commercial
services sectors. Somewhat differently, the Acquiring Fund has a more flexible
approach and will focus in industry sectors that the portfolio managers believe
have favorable economic profit trends. To select portfolio securities, the Fund
primarily considers growth prospects, as well as economic and political outlook,
the value of a particular security relative to another security, trends in the
determination of corporate profits and management capabilities and practices.
Similarly, the Acquiring Fund uses both traditional value-based analyses, as
well as the economic profit of a company measured by its cash flow relative to
its capital assets, in order to identify companies whose current market
valuations do not fully recognize future economically profitable growth.
Investment Limitations. The Fund and the Acquiring Fund have adopted
certain fundamental and non-fundamental investment limitations. Fundamental
investment limitations may not be changed without the affirmative vote of the
holders of a majority of the relevant Fund's outstanding shares. Each Fund has
an identical fundamental investment limitation with respect to underwriting
securities. The Funds also have fundamental investment limitations with respect
to: (i) investing in a single industry, with the Acquiring Fund subject to
certain exceptions with respect to domestic political entities, certain secured
repurchase agreements and wholly-owned financial companies that meet specific
requirements; (ii) purchasing real estate, with the Acquiring Fund also subject
to a limitation for selling real estate and an exception for securities secured
by, or issued by companies that invest in, real estate or interests therein;
(iii) investing in commodities, with the Fund subject to certain exceptions for
specific forward and derivatives transactions, and the Acquiring Fund subject to
the restriction, except for certain forward foreign exchange, stock index and
currency transactions; (iv) issuing senior securities, with the Acquiring Fund
permitted to issue senior securities as permitted under the 1940 Act and the
Fund permitted to issue senior securities limited to one-third of total assets;
(v) making loans, with both Funds subject to certain identical exceptions, and
with the Fund subject to certain additional exceptions for the acquisition of
specific instruments; (vi) borrowing money in excess of 33-1/3% of assets for
both Funds, with the Acquiring Fund subject to an exception concerning banks and
subject to the condition that there be a certain asset coverage, and the Fund
subject to an exception for temporary purposes; and (vii) mortgaging, pledging
or hypothecating securities, with the Fund restricted except for certain
purposes, and the Acquiring Fund permitted to use up to 33-1/3% of its assets
for such purposes. The Fund has additional fundamental investment limitations
with respect to: purchasing securities of one issuer, limited to 5% of total
assets or 10% of a single issuer, except that 25% of the assets of the Fund are
not subject to this limitation; short-sales, limited to 25% of total assets; and
purchasing or selling natural resources. The Acquiring Fund has additional
fundamental investment limitations with respect to mortgaging, pledging or
hypothecating any of its assets.
The Funds both have non-fundamental restrictions with respect to investing
in foreign securities, with the Fund limited to 10% of assets and the Acquiring
Fund limited to 35% of total assets. The Acquiring Fund also has non-fundamental
investment limitations with respect to: purchasing securities of one issuer,
with the Acquiring Fund limited to 25% of total assets with respect to 50% of
its assets and 5% for the remaining 50%; investing for the purpose of exercising
control or management of other companies; purchasing securities on margin; and
purchasing or selling natural resources.
-14-
<PAGE>
Certain Investment Practices. For each of the following practices, this
table shows the applicable investment limitation. Risks are indicated for each
practice. The specific risks associated with each of the investment practices
described below are defined for the Acquiring Fund in the Acquiring Fund's
Prospectus(es), which accompany this Prospectus/Proxy Statement, and for the
Fund in the Fund's Prospectus.
Key to Table:
/x/ Permitted without limitation; does not indicate actual use
20% Italic type (e.g., 20%) represents an investment limitation as a
percentage of net fund assets; does not indicate actual use
20% Roman type (e.g. 20%) represents an investment limitation as a
percentage of total fund assets; does not indicate actual use
/ / Permitted, but not expected to be used to a significant extent
-- Not permitted
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Investment Practice Limit
-------------------------------------------------------------------------------------------------------------------
Acquiring
Fund Fund
-------------------- ------------------
<S> <C> <C>
Borrowing. The borrowing of money from banks to meet redemptions or 33 1/3% 33 1/3%
for other temporary or emergency purposes. Speculative exposure risk. + an additional 5%
for temporary
purposes
Company. Limits on purchasing securities of any one issuer. Liquidity, 25% 5% total assets
market, operational risks. with respect to 50% 10% of issuer(3)
of its assets and 5% (except US
for the remaining 50% government)
Concentration / Low Diversity of Investment. The Fund invests in a /x/ /x/
limited number of large, carefully selected companies, believed to
possess superior growth potential. The Fund's overall performance is
more susceptible to fluctuations in the performance of any single
holding. Market risks.
Convertible securities. Bond or preferred stock convertible to common /x/ /x/
stock of an issuer. Correlation, credit, hedged exposure, liquidity, market,
speculative exposure risks.
Hedging transactions. Instruments, such as options, futures or / / / /
forwards, intended to manage fund exposure to currency risk. Options, For purpose of
futures or forwards involve the right or obligation to buy or sell a hedging against
given amount of foreign currency at a specified price and future decline in
date.(1) Correlation, credit, currency, hedged exposure, liquidity, portfolio value only
political, valuation risks.
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Investment Practice Limit
-------------------------------------------------------------------------------------------------------------------
Acquiring
Fund Fund
-------------------- ------------------
<S> <C> <C>
Futures and options on futures. Exchange-traded contracts that enable / / / /
a fund to hedge against or speculate on future changes in currency
values, interest rates or stock indexes. Futures obligate the fund (or
give it the right, in the case of options) to receive or make payment
at a specific future time based on those future changes.(1)
Correlation, currency, hedged exposure, interest-rate, market,
speculative exposure risks.(2)
Investment companies. Investments in other investment companies. To the extent Limited amount
Market, liquidity, operational risks. permitted by the subject to limits
1940 Act under the 1940 Act
Investment-grade debt securities. Debt securities rated within the / / / /
four highest grades (AAA/Aaa through BBB/Baa) by Standard & Poor's or
Moody's rating service, and unrated securities of comparable quality.
Credit, interest-rate, market risks.
Mortgage-backed and asset-backed securities. Debt securities backed / / / /
by pools of mortgages, including passthrough certificates and other
senior classes of collateralized mortgage obligations (CMOs), or other
receivables. Credit, extension, interest-rate, liquidity, prepayment
risks.
Non-investment-grade debt securities. Debt securities and convertible / / - -
securities rated below the fourth-highest grade (BBB/Baa) by Standard
& Poor's or Moody's rating service, and unrated securities of
comparable quality. Commonly referred to as junk bonds. Credit,
information, interest-rate, liquidity, market, valuation risks.
Non-U.S. Securities. Investment in foreign securities. Currency, 35% 10%
market, political risks.
Options. Instruments that provide a right to buy (call) or sell (put) / / /x/
a particular security or an index of securities at a fixed price Limited to writing
within a certain time period. A fund may purchase and write both put options which are:
and call options for hedging or speculative purposes.(1) Correlation, (i) valued at 10%
credit, hedged exposure, liquidity, market, speculative exposure risks. or less of total
assets and are (ii)
fully covered
(limited to 5% for
non-hedging CFTC
options)
Restricted and other illiquid securities. Securities with restrictions 15% 15%
on trading, or those not actively traded. May include private
placements. Liquidity, market, valuation risks.
Securities lending. Lending portfolio securities to financial 33 1/3% 33 1/3%
institutions; a fund receives cash, U.S. government securities or bank
letters of credit as collateral. Credit, liquidity, market,
operational risks.
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Investment Practice Limit
-------------------------------------------------------------------------------------------------------------------
Acquiring
Fund Fund
-------------------- ------------------
<S> <C> <C>
Short sales. Selling borrowed securities with the intention of / / 25%
repurchasing them for a profit on the expectation that the market
price will drop. If a fund were to take short positions in stocks
that increase in value, then it would be likely to underperform
similar mutual funds that do not take short positions. Liquidity,
market, speculative exposure risks.
Single industry. Companies within a single industry. Correlation, 25% 25%
market, operational risks. except US government
instruments
Start-up and other small companies. Companies with small relative 5% --
market capitalizations, including those with continuous operations of
less than three years. Information, liquidity, market, valuation risks.
Temporary defensive tactics. Placing some or all of a fund's assets in / / / /
investments such as money-market obligations and investment-grade debt
securities for defensive purposes. Although intended to avoid losses
in adverse market, economic, political or other conditions, defensive
tactics might be inconsistent with a fund's principal investment
strategies and might prevent a fund from achieving its goal.
Warrants. Options issued by a company granting the holder the right to / / 5%
buy certain securities, generally common stock, at a specified price
and usually for a limited time. Liquidity, market, speculative
exposure risks.
When-issued securities and forward commitments. The purchase or sale 25% /x/
of securities for delivery at a future date; market value may change
before delivery. Liquidity, market, speculative exposure risks.
</TABLE>
----------
(1) The Funds are not obligated to pursue any hedging strategy and do not
represent that these techniques are available now or will be available at
any time in the future.
(2) Each Fund is limited to 5% of net assets for initial margin and premium
amounts on futures positions considered to be speculative by the Commodity
Futures Trading Commission.
(3) Up to 25% of the Fund's assets may be invested without regard to such
limitation.
Determination of Net Asset Value of Shares of the Acquiring Fund
The net asset value ("NAV") of shares of the Acquiring Fund is determined
at the close of regular trading on the New York Stock Exchange ("NYSE") (usually
4 p.m. Eastern Time) each day the NYSE is open for business. It is calculated by
dividing a Class's total assets less its liabilities, by the number of shares of
such Class outstanding. The Acquiring Fund values its securities based on market
quotations when it calculates its NAV. If market quotations are not readily
available, securities and other assets are valued by another method the Board of
Directors believes accurately reflects fair value. Debt obligations that will
mature in 60 days or less are valued on the basis of amortized cost, unless the
Board determines
-17-
<PAGE>
that using this method would not reflect an investment's value. Some securities
of the Acquiring Fund may be listed on foreign exchanges that are open on days
(such as U.S. holidays) when the Acquiring Fund does not compute its price. This
could cause the value of the Acquiring Fund's portfolio investments to be
affected by trading on days when you cannot buy or sell shares.
Management of Each Fund
CSAM, located at 466 Lexington Avenue, 16th Floor, New York, New York
10017-3174, provides investment advisory services to both Funds under separate
advisory agreements. (The specific persons at CSAM who are responsible for the
day-to-day management of the Acquiring Fund are described in the Prospectus of
the Acquiring Fund, which accompanies this Prospectus/Proxy Statement.)
In addition, PFPC Inc. ("PFPC") and CSAMSI provide accounting and
co-administrative services as applicable to the Acquiring Fund. PFPC and CSAMSI
provide certain financial administration, accounting, administrative, personnel
and other services necessary to operate the Acquiring Fund. CSAMSI has served as
distributor of the Acquiring Fund prior to January 3, 2000 and since August 1,
2000 and will continue to provide distribution services following the
Acquisition. Provident Distributors, Inc. served as distributor of the Acquiring
Fund from January 3 to August 1, 2000. CSAMSI serves as co-administrator of the
Acquiring Fund. State Street Bank and Trust Company ("State Street") is the
shareholder servicing agent, transfer agent and dividend disbursing agent for
the Acquiring Fund. Brown Brothers Harriman & Co. is the custodian of the
Acquiring Fund. PricewaterhouseCoopers LLP serves as auditor for the Acquiring
Fund. Citibank, N.A. serves as custodian to the Fund. PFPC serves as transfer
agent for the Fund. Ernst & Young LLP serves as auditor for the Fund.
The Fund pays a management fee to CSAM of 0.75% of average daily net
assets and the Acquiring Fund pays a management fee to CSAM of 0.75% of average
daily net assets. In addition to the management fee, the Acquiring Fund pays a
co-administration fee to CSAMSI of .10% of average daily net assets of Common
Class shares while the Fund does not currently pay its administrator, CSAM, for
administrative services. CSAM and CSAMSI have, however, agreed to waive their
respective fees as described below. The Acquiring Fund pays PFPC a fee
calculated at an annual rate of .10% of its first $500 million, 0.08% of the
next $1 billion and 0.06% over $1.5 billion of the average daily net assets
(exclusive of out-of-pocket expenses). Importantly, the distribution fee for
Class B shares and Class C shares of the Fund would decrease following the
Acquisition, and would remain unchanged for Class A and Class R shares. CSAM and
CSAMSI, as applicable, have agreed to waive fees, and CSAM has agreed to
reimburse expenses, for the two-year period beginning on the Closing Date to the
extent necessary to maintain the average annual expense ratio of the Common
Class of the Acquiring Fund at the lower of, the average annualized expense
ratio of the Class A shares, Class B shares, Class C shares and Class R shares
of the Fund and the average annualized expense ratio of the Common Class
measured over the 60-day period ended on the Closing Date.
Interest of CSAM in the Acquisition
CSAM may be deemed to have an interest in the Plan and the Acquisition
because it provides investment advisory services to each Fund. CSAM receives
compensation from each Fund for services it provides pursuant to separate
advisory agreements which, in the case of the Fund, is an interim agreement.
Whether or not shareholders of the Fund approve the Plan, shareholders of the
Fund are being asked to approve a new investment advisory agreement with CSAM.
See Proposal Number 2 for additional information regarding approval of a new
investment advisory agreement for the Fund. The terms and provisions of the
current arrangements with CSAM are described in each Fund's Prospectus and
Statement of Additional Information. Future growth of assets of the Acquiring
Fund, if any, can be expected to increase the total amount of fees payable to
CSAM and its affiliates and to reduce the amount
-18-
<PAGE>
of fees and expenses required to be waived to maintain total fees and expenses
of the Acquiring Fund at agreed upon levels. CSAM may also be deemed to have an
interest in the Plan and the Acquisition because, as of the Record Date, it or
one or more of its affiliates possessed or shared voting power or investment
power as a beneficial owner or as a fiduciary on behalf of its customers or
employees in the Fund (see "Information About the Acquisition -- Share Ownership
of the Fund" above). CSAM and its affiliates have advised the Fund that they
intend to vote the shares over which they have voting power at the Meeting in
the manner instructed by the customers for which such shares are held. See
"Voting Information."
CSAM may also be deemed to have an interest in the Plan and Acquisition
because its affiliate, CSAMSI, serves as the co-administrator and distributor
for the Acquiring Fund and as distributor for the Fund. As such, CSAMSI receives
compensation for its services.
Information on Shareholders' Rights
General. The Funds are both open-end management investment companies
registered under the 1940 Act. The Acquiring Fund is also registered as a
non-diversified management investment company. Both Funds continuously offer to
sell shares at their current net asset values. The Fund is a series of a
Delaware business trust, governed by its Agreement and Declaration of Trust,
dated July 15, 1999, By-Laws and Board of Trustees. The Acquiring Fund is a
Maryland corporation organized on August 3, 1998 and is governed by its Articles
of Incorporation, By-Laws and Board of Directors. Each Fund is also governed by
applicable state and federal law. The Acquiring Fund has an authorized capital
of three billion shares of common stock with a par value of $.001 per share, of
which one billion are designated Common Class, one billion are designated
Advisor Class and one billion are designated Institutional Class. The Fund has
an unlimited number of transferable shares of beneficial interest with par value
of $.01 per share. In each Fund, shares represent interests in the assets of the
relevant Fund and have identical voting, dividend, liquidation and other rights
(other than as set forth below) on the same terms and conditions except that
expenses related to the distribution of each class of shares of the relevant
Fund are borne solely by such class and each class of shares has exclusive
voting rights with respect to provisions of such Fund's Rule 12b-1 distribution
plan, if any, pertaining to that particular class.
Multi-Class Structure. Each Fund is authorized to offer multiple classes.
The Fund offers Class A, B, C and R shares. The Acquiring Fund expects to
continue to offer shares of its Common Class and Institutional Class following
the Acquisition.
Trustees/Directors. The Agreement and Declaration of Trust of the Fund and
the By-Laws of the Acquiring Fund provide that the term of office of each
Trustee or Director, respectively, shall be from the time of his or her election
and qualification until his or her successor shall have been elected and shall
have qualified. Any Trustee of the Fund may be removed by at least two-thirds of
the shares entitled to vote or a majority, in the case of Directors of the
Acquiring Fund. Vacancies on the Boards of either Fund may be filled by the
Trustees/Directors remaining in office, provided that no vacancy or vacancies
may be filled by action of the remaining Trustee/Directors if, after the filling
of the vacancy or vacancies, fewer than two-thirds of the Trustees/Directors
then holding office shall have been elected by the shareholders of the relevant
Fund. A meeting of shareholders will be required for the purpose of electing
Trustees/Directors whenever (a) fewer than a majority of the Trustees/Directors
then in office were elected by shareholders of the relevant Fund or (b) a
vacancy exists that may not be filled by the remaining Trustees/Directors and
must be filled.
Voting Rights. Neither Fund holds a meeting of shareholders annually, and
there normally is no meeting of shareholders for the purpose of electing
Trustees/Directors unless and until such time as less than a majority of the
Trustees/Directors of the relevant Fund holding office have been elected by
-19-
<PAGE>
shareholders or a vacancy exists that may not be filled by the remaining
Trustees/Directors. At such times, the Trustees or Directors then in office will
call a shareholders' meeting for the election of Trustees/Directors.
Liquidation or Termination. In the event of the liquidation or termination
of either Fund, the shareholders of the relevant Fund are entitled to receive,
when and as declared by the Trustees or Directors, the excess of the assets over
the liabilities belonging to such Fund. In either case, the assets so
distributed to shareholders will be distributed among the shareholders in
proportion to the number of shares held by them and recorded on the books of
such Fund.
Liability of Trustees or Directors. The constituent documents of each Fund
provide that its Trustees/Directors and officers shall not be liable in such
capacity for monetary damages and, in the case of the Fund, also for breach of
fiduciary duty. However, this provision in limited, in the case of the Acquiring
Fund, to the extent such exemption is not permitted by law and, in the case of
both Funds, in the case of bad faith, willful misfeasance, gross negligence or
reckless disregard of duties on the part of such Trustee/Director or officer.
The constituent instruments of each Fund provide that the relevant Fund shall
indemnify each Trustee/Director and officer and permit advances for the payment
of expenses relating to the matter for which indemnification is sought, in the
case of the Acquiring Fund, to the fullest extent permitted by applicable law
and, in the case of both Funds, except for bad faith, willful misfeasance, gross
negligence or reckless disregard of duties on the part of such Trustee or
officer. Pursuant to the Plan, the Acquiring Fund extends the protection it
offers to its current Directors and officers to the Trustees and officers of the
Fund for liability relating to the Acquisition. In addition, CSAM has undertaken
to obtain and pay the cost of a rider to the Fund's Directors and Officers
liability policy to extend the coverage under such policy to three years after
the Closing Date.
Rights of Inspection. Maryland law permits any shareholder of the
Acquiring Fund or any agent of such shareholder to inspect and copy, during
usual business hours, the By-Laws, minutes of shareholder proceedings, annual
statements of the affairs and voting trust agreements of the relevant Fund on
file at its principal offices. Delaware business trust law does not have
comparable provisions.
Shareholder Liability. Under Maryland law, shareholders of the Acquiring
Fund do not have personal liability for corporate acts and obligations. Shares
of the Acquiring Fund issued to the shareholders of the Fund in the Acquisition
will be fully paid and nonassessable when issued, transferable without
restrictions and will have no preemptive rights. Delaware business trust law
does not have comparable provisions.
Conclusion
The Plan was approved by the Board of Trustees of the Fund on December 18,
2000 and by the Board of Directors of the Acquiring Fund on December 21, 2000.
The Boards of each Fund determined that the Acquisition is in the best interests
of shareholders of their respective Fund and that the interests of existing
shareholders of the Fund and the Acquiring Fund would not be diluted as a result
of the Acquisition. If the shareholders of the Fund do not approve the Plan or
if the Acquisition is not completed, the Fund will continue to engage in
business as a series of a registered investment company and the Board of the
Fund will consider other possible courses of action available to it, including
resubmitting the Acquisition proposal to shareholders.
Required Vote
Approval of the Plan requires the affirmative vote of a majority of the
Fund's outstanding shares in the aggregate without regard to class, in person or
by proxy, if a quorum is present.
-20-
<PAGE>
In the event that shareholder approval of the Plan is not obtained, the
Board of the Fund will consider other possible courses of action available to
it, including resubmitting the Acquisition proposal to shareholders.
THE BOARD OF TRUSTEES OF THE FUND, INCLUDING THE TRUSTEES WHO
ARE NOT "INTERESTED PERSONS" (AS THAT TERM IS DEFINED IN THE 1940 ACT)
RECOMMENDS THAT YOU VOTE FOR PROPOSAL NUMBER 1.
-21-
<PAGE>
PROPOSAL NUMBER 2 -
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
As a result of the acquisition of Donaldson, Lufkin & Jenrette, Inc.
("DLJ") by Credit Suisse Group ("Credit Suisse"), shareholders of the Fund are
being asked to approve a new investment advisory agreement (the "New Investment
Advisory Agreement") with CSAM, a member of Credit Suisse Asset Management, the
institutional asset management and mutual fund arm of Credit Suisse and an
indirect wholly-owned U.S. subsidiary of Credit Suisse, in the event that the
Plan is not approved. The reason the Fund may require a new investment advisory
agreement is because on November 3, 2000, the date the acquisition of DLJ was
consummated, the then-existing investment advisory agreement for the Fund (the
"Previous Investment Advisory Agreement") terminated pursuant to the terms of
the Previous Investment Advisory Agreement.
In anticipation of the termination of the Previous Investment Advisory
Agreement, at a meeting held on October 26, 2000, the Board of Trustees,
including the Independent Trustees, unanimously approved an interim investment
advisory agreement for the Fund (the "Interim Investment Advisory Agreement")
containing substantially the same terms as the Previous Investment Advisory
Agreement between DLJ Asset Management Group, Inc. ("DLJAM" and, with CSAM, an
"Adviser") and the Fund. The Interim Investment Advisory Agreement terminates,
pursuant to its terms, upon the earlier of 150 days from November 3, 2000, which
is April 2, 2001, or the date of approval by the shareholders of a new
investment advisory agreement. See "The Previous and Interim Investment Advisory
Agreement" and "The New Investment Advisory Agreement."
The Board of Trustees, including a majority of the Independent Trustees,
recommend that shareholders approve the New Investment Advisory Agreement for
the Fund. A form of the New Investment Advisory Agreement is attached as Exhibit
B.
Information About DLJAM
Prior to the acquisition of DLJ, DLJAM was a wholly-owned subsidiary of
Donaldson, Lufkin & Jenrette Securities Corporation, the former distributor of
the Fund's shares, a wholly-owned subsidiary of DLJ, which was in turn an
independently operated, indirect subsidiary of AXA Financial, Inc. ("AXA
Financial"), a holding company controlled by AXA ("AXA"), a French insurance
holding company. DLJAM succeeded Wood, Struthers & Winthrop Management Corp.,
established in 1871 as a private concern to manage money for the Winthrop family
of Boston. Following the acquisition of DLJ, DLJAM was merged with Credit Suisse
Investment Corporation ("CSIC"), the parent company of CSAM. CSIC subsequently
changed its name to CSAM Americas Holding Corp. and CSIC contributed all of its
assets and liabilities, including its investment advisory agreements, to CSAM.
Prior to the acquisition of DLJ, CSAM managed $68 billion of the $198 billion in
total assets managed by Credit Suisse Asset Management globally. As a result of
the transfer of the assets and business of DLJAM to CSAM, CSAM manages more than
$100 billion in total assets in the U.S.
The Previous and Interim Investment Advisory Agreement
CSAM presently acts as the investment adviser to the Fund pursuant to the
Interim Investment Advisory Agreement. Prior to November 3, 2000, DLJAM served
as investment adviser to the Fund pursuant to the Previous Investment Advisory
Agreement, dated September 1, 1995, between the Fund and DLJAM. The Previous
Investment Advisory Agreement was last approved by the Fund's shareholders on
August 23, 1995. The Previous Investment Advisory Agreement was last approved
for continuance by the Board of Trustees at a meeting held on August 3, 2000.
The provisions of the Interim Investment Advisory Agreement and the Previous
Investment Advisory Agreement are substantially the
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same, except for the identity of the parties, the commencement and termination
dates and the payment of fees. See "Service Provided" and "Fees" below.
Service Provided. Both the Previous Investment Advisory Agreement and the
Interim Investment Advisory Agreement provide that the Adviser is to manage the
investment and reinvestment of the Fund assets in accordance with the Fund's
investment objective and policies, make investment decisions for the Fund and
arrange for the purchase or sale of portfolio securities and other assets. In
addition, the Previous Investment Advisory Agreement and the Interim Investment
Advisory Agreement of the Fund specifies that the Adviser may provide and be
reimbursed for administrative services provided to the Fund, although the
Adviser has not sought such reimbursement from the Fund.
Under the Interim Investment Advisory Agreement, the Fund will pay
registration and filing fees to the Securities and Exchange Commission (the
"Commission") and state regulatory authorities. The Fund pays all other expenses
not assumed by CSAM, including the advisory fees, advertising and promotional
expenses pursuant to a 12b-1 plan, custody, transfer, and dividend disbursing
expenses, legal and auditing costs, fees and expenses of Trustees who are not
affiliated with CSAM, costs of printing prospectuses, statements of additional
information and shareholder reports to existing shareholders, costs of
maintenance of corporate existence, and interest charges, taxes, brokerage fees,
and commissions.
The Previous Investment Advisory Agreement and the Interim Investment
Advisory Agreement provide for termination at any time without penalty on sixty
days' prior written notice, or, in the case of the Interim Investment Advisory
Agreement, ten days', by a vote of the holders of a majority of the Fund's
outstanding voting securities or by a vote of a majority of the Board of
Trustees or by the Adviser on sixty days' prior written notice, and will
automatically terminate in the event of its assignment. The Previous Investment
Advisory Agreement and the Interim Investment Advisory Agreement provide that
the Adviser shall not be liable thereunder for any mistake of judgment or in any
event whatsoever. Notwithstanding any indemnification provision in the Previous
and the Interim Investment Advisory Agreement, the 1940 Act and the Investment
Advisers Act of 1940 limit the circumstances under which an investment adviser
may be indemnified.
The terms of the Previous Investment Advisory Agreement and the Interim
Investment Advisory Agreement permit the Adviser to serve as investment adviser
to other persons, firms or corporations, including other investment companies.
The Interim Investment Advisory Agreement was approved by the Board of
Trustees as a temporary measure to provide for continuity of management of the
Fund during and following the Acquisition. The Agreement will continue until the
earlier of April 2, 2001 or the approval of the New Investment Advisory
Agreement by the shareholders of the Fund, and thereupon will automatically
terminate for the Fund. See "The New Investment Advisory Agreement" below.
Fees. For the services provided and expenses borne by DLJAM under the
Previous Investment Advisory Agreement, DLJAM was paid a fee, as full
compensation therefor, of 0.75% of the first $100 million and 0.625% of the
balance of the average daily net assets of the Fund. The aggregate amount paid
for the fiscal year ended October 31, 2000 was $ 47,380. For the same period,
DLJAM waived expenses of $118,483. For the period November 1, 2000 through
October 31, 2001, DLJAM had undertaken in writing to reduce its management fees
and reimburse operating expenses in order to limit the total operating expenses
for the Fund to 1.19% for Class A shares and for Class R shares and 1.94% for
Class B shares and Class C shares through October 31, 2002, in each case, of the
average daily net assets attributable to such Class. CSAM has agreed to assume
this undertaking for this period.
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<PAGE>
As required by Rule 15a-4(b)(2)(vi) of the 1940 Act, the Interim
Investment Advisory Agreement provides that advisory fees earned by CSAM with
respect to the Fund will be deposited into an interest-bearing escrow account
with Citibank, N.A., and will be paid to CSAM only if a majority of the
shareholders of the Fund approve a New Investment Advisory Agreement for the
Fund. If shareholders of the Fund do not approve a New Investment Advisory
Agreement, CSAM will receive as compensation or reimbursement in respect of the
Fund the lesser of: (i) the fee under such Interim Investment Advisory
Agreement; or (ii) the costs of providing services during the term of such
Interim Investment Advisory Agreement (plus, in each case, interest earned on
that amount while in escrow).
Brokerage Commissions
The Fund did not conduct any brokerage transactions through affiliated
broker-dealers of the Fund during the fiscal year ended October 31, 2000.
The New Investment Advisory Agreement
The following summary of the New Investment Advisory Agreement between the
Fund and CSAM is qualified in its entirety by reference to the form thereof
which is attached hereto as Exhibit B.
Service Provided. The terms of the New Investment Advisory Agreement are
substantially the same as the terms of the Previous and Interim Investment
Advisory Agreements in all material respects. The principal changes, which are
summarized below, largely reflect conforming changes that have been made to
promote consistency among the funds advised by CSAM and to permit ease of
administration. The principal changes are: (1) the identity of the parties; (2)
commencement and termination dates; (3) there is no longer a term for the
provision by the Adviser and reimbursement by the Fund of the costs of
administrative services to the Fund; and (4) there is no longer indemnification
by the Fund to CSAM and its officers, directors and employees for liabilities
and expenses reasonably incurred in connection with the defense or disposition
of certain actions. The New Investment Advisory Agreement also grants CSAM the
authority to exercise voting rights with respect to portfolio securities and to
negotiate brokerage commissions on behalf of the Fund. These rights were not
expressly granted under the Previous and Interim Investment Advisory Agreement.
It is proposed, subject to the approval of the Board of Trustees, that the
Fund retain Credit Suisse Asset Management Securities, Inc. ("CSAMSI") and an
outside administrator to be determined as co-administrators to the Fund at a
total rate not to exceed 0.20% of average daily net assets. Administrative
services have been provided by CSAM under the Interim Advisory Agreement and
DLJAM under the Previous Investment Advisory Agreement with a right to
reimbursement of costs that was not exercised. CSAM has undertaken to continue
to provide administrative services without additional fees should the Board of
Trustees not approve the co-administrator arrangement described above. CSAM has
agreed, in any event, to impose limits on the average annual expense ratio of
the Fund in two ways. First, CSAM has agreed to assume DLJAM's undertaking to
limit the Fund's average annual operating expenses until October 31, 2001.
Second, CSAM has agreed in writing to limit average annual expenses from the
date of the acquisition of DLJ by Credit Suisse, November 3, 2000, until
November 3, 2002 to the annualized levels previously paid by the Fund measured
over the 60-day period ending on November 3, 2000. Consequently, it is not
anticipated that there will be any increase in the average annual operating
expense ratio of the Fund through November 3, 2002 due to the retention of
CSAMSI and the outside administrator as co-administrators. Consequently, the
Fund will not bear any additional cost through at least November 3, 2002 as a
result of the appointment of the co-administrators.
In addition, the New Investment Advisory Agreement would change the
provisions governing the use of the Adviser's name and expand such provisions to
permit certain uses of the name Credit Suisse.
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<PAGE>
Pursuant to a License Agreement among Warburg, Pincus & Co., Credit Suisse and
other parties thereto, Credit Suisse has been granted by Warburg, Pincus & Co.
an exclusive license of the rights to use and sublicense the names "Warburg
Pincus" and derivations and abbreviations thereof in the asset management sector
of the financial services industry (together, the "Warburg Marks"). Under the
New Investment Advisory Agreement, the Fund has the nonexclusive right to use
one or more of the Warburg Marks and the name "Credit Suisse" and derivations
and abbreviations thereof (together, the "CS Marks") as part of its name or the
names of certain classes of its shares, as applicable, and to use the Warburg
Marks and the CS Marks in the Fund's investment products and services. This
license continues only as long as the New Investment Advisory Agreement is in
place, and with respect to the Warburg Marks only as long as Credit Suisse
continues to be a licensee of the Warburg Marks as described above. As a
condition of the license, the Fund undertakes certain responsibilities and
agrees to certain restrictions, such as agreeing not to challenge the validity
of the Warburg Marks or the CS Marks or any ownership by Warburg, Pincus & Co.
of the Warburg Marks or Credit Suisse of the CS Marks, and the obligation to use
the names within commercially reasonable standards of quality. As part of the
acquisition of DLJ, CSAM has acquired all of DLJAM's rights to use the "DLJ"
name and any derivations and abbreviations thereof (the "DLJ Marks"). In the
event that the New Investment Advisory Agreement is terminated, the Fund must
not use a name likely to be confused with those associated with the Warburg
Marks, the CS Marks or the DLJ Marks.
If approved by the shareholders of the Fund, the New Investment Advisory
Agreement will continue in effect for the Fund for an initial two-year period,
and from year to year thereafter, subject to termination as hereinafter
provided, if such continuance is specifically approved at least annually (i) by
a vote of the holders of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act) or by a vote of the Trustees, cast in person
at a meeting called for the purpose of voting on such approval, and (ii) by a
vote of a majority of Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval. The New Investment Advisory
Agreement, like the Previous Investment Advisory Agreement, will terminate
automatically upon their assignment and are terminable at any time without
penalty by a vote of the Trustees or by a vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act) on 60 days' written
notice to CSAM and on 90 days' written notice to the Fund.
Fees. As compensation for services provided and the expenses borne by CSAM
under the New Investment Advisory Agreement, the Fund will pay CSAM the same
rate of fees as was paid to CSAM under the Interim Investment Advisory
Agreement. These fees, which are based upon a percentage of the Fund's average
daily net assets, are: 0.75 of 1% of the first $500,000,000 and 0.625 of 1% of
the balance. In addition, CSAM has agreed to assume DLJAM's obligation with
respect to the undertaking described above under "The Previous and Interim
Advisory Agreement - Fees".
The Board of Trustees has approved a change in the name of the Fund to
"Credit Suisse Warburg Pincus Strategic Growth Fund." This change will become
effective upon the filing of appropriate documentation with the office of the
Secretary of State of the State of Delaware.
Information About CSAM
Information about CSAM, its managers and principal executive officers,
including those who are also officers of the Fund, its investment company
clients, its brokerage policies and the officers of CSAM, is presented in
Exhibit C.
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<PAGE>
Section 15(f)
Section 15(f) provides a non-exclusive safe harbor that permits an
investment adviser to an investment company or any affiliated persons to receive
any amount or benefit in connection with a "change in control" of the investment
adviser as long as two conditions are satisfied. First, an "unfair burden" must
not be imposed on investment company clients of the adviser as a result of the
transaction, or any express or implied terms, conditions or understandings
applicable to the transaction. The term "unfair burden" (as defined in the 1940
Act) includes any arrangement during the two-year period after the transaction
whereby the investment adviser (or predecessor or successor adviser), or any
"interested person" (as defined in the 1940 Act) of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from such an
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any other person in connection
with the purchase or sale of securities or other property to, from or on behalf
of such investment company. The Board of the Fund has been advised that CSAM is
aware of no circumstances arising from the acquisition of DLJ that might result
in an unfair burden being imposed on the Fund.
The second condition of Section 15(f) is that during the three-year period
after the transaction, at least 75% of each such investment company's board of
trustees must not be "interested persons" (as defined in the 1940 Act) of the
investment adviser (or predecessor or successor adviser). Credit Suisse and each
of the other parties to the acquisition of DLJ have agreed to use their
reasonable best efforts to ensure compliance with Section 15(f) as it applies to
that acquisition during the applicable time periods.
Evaluation by the Board
The Trustees discussed the acquisition of DLJ and its implications for the
Fund at their meetings held on October 26, 2000 and December 18, 2000. The
Trustees received from representatives of CSAM (the "Representatives") such
information as the Trustees requested and as was reasonably necessary to
evaluate the terms of the Interim Investment Advisory Agreement and the proposed
New Investment Advisory Agreement.
During the October 26, 2000 meeting, the Trustees (including a majority of
the Independent Trustees), after evaluation and with the advice and assistance
of counsel, voted to approve the Interim Investment Advisory Agreement and, at
their meeting held on December 18, 2000, its New Investment Advisory Agreement
described above.
In determining whether it was appropriate to approve the New Investment
Advisory Agreement and to recommend approval to shareholders, the Board of the
Fund, including the Trustees who are not parties to the New Investment Advisory
Agreement or interested persons of such parties, considered various materials
and representations provided by CSAM, including information concerning
compensation arrangements to be implemented in connection with the acquisition
of DLJ, and considered a report provided by CSAM, and was advised by Fund
counsel with respect to these matters.
During their deliberations, the Trustees reviewed and discussed financial
and other information provided by the Representatives relating to CSAM. Among
other things, the Trustees considered the fact that CSAM is a significant and
sophisticated investment manager with substantial experience in providing
investment advisory and management services to investment companies, pension
funds and other institutional clients. The Trustees evaluated the management and
operations of CSAM and information provided by CSAM regarding the personnel
proposed to manage the Fund, the investment performance of CSAM, and the fact
that CSAM has stated that it has no current plan to change or to recommend that
the shareholders of the Fund change any of the Fund's policies or objectives in
any material respect. The Trustees also took into account the fact that CSAM has
stated its intention to continue to employ in the
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<PAGE>
same capacity as employees of CSAM, employees of DLJAM who were involved in the
management of the Fund. CSAM therefore expects to provide the Fund with a degree
of continuity in portfolio management; however, there can be no assurance that
the investment professionals previously employed by DLJAM and now employed by
CSAM will continue to serve in their current capacities. The Board of Trustees
obtained assurances from the Representatives that CSAM would provide
satisfactory advisory and other services to the Fund of a scope and quality at
least equivalent, in the Trustees' judgment, to the scope and quality of
services previously provided to the Funds. The Trustees also considered that
CSAM would continue DLJAM's existing undertaking to cap average annual expenses
for the Fund for a two-year period following the acquisition of DLJ by Credit
Suisse. The Board believes that, like the Previous Investment Advisory Agreement
and the Interim Investment Advisory Agreement, the New Investment Advisory
Agreement will enable the Fund to obtain appropriate services at a cost that is
reasonable and in the best interests of the Fund and its shareholders.
Accordingly, approval of the New Investment Advisory Agreement with CSAM should
have no immediate impact, other than as already noted above, on the management
of the Fund and the Fund should continue to receive the same quality of service.
The Board of Trustees further considered the nature and quality of the
administrative services currently provided by CSAM and also considered CSAM's
assurances that it or the external administrator would provide the same level of
administrative services to the Fund as it currently provides and that any
changes in the current arrangements with CSAM would be subject to Board
approval.
The Board of Trustees of the Fund, including the Independent Trustees,
recommend that the shareholders of the Fund approve the New Investment Advisory
Agreement.
Required Vote
In order to be approved by shareholders of the Fund, the New Investment
Advisory Agreement must be approved by the holders of a majority of the
outstanding voting securities of the Fund which is defined in the 1940 Act as
the lesser of (i) 67% of such shares present at the Meeting if the owners of
more than 50%, as the case may be, of the shares of the Fund then outstanding
are present in person or by proxy, or (ii) more than 50% of the outstanding
shares of the Fund, without regard to class.
In the event shareholder approval of the New Investment Advisory Agreement
is not obtained, the Trustees will take such action as they deem to be in the
best interests of the Fund and the Fund's shareholders.
THE BOARD OF TRUSTEES OF THE FUND, INCLUDING THE INDEPENDENT TRUSTEES,
RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO. 2.
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PROPOSAL NUMBER 3 -
ELECTION OF EIGHT TRUSTEES TO THE BOARD OF TRUSTEES
Shareholders will vote at the Meeting to elect eight Trustees for the
Board of Trustees of the DLJ Select Funds. Each Trustee so elected will hold
office until the next meeting of shareholders and until his/her successor is
elected and qualifies, or until his/her term as Trustee is terminated as
provided in the Trust's Agreement and Declaration of Trust. If Proposal Number 1
is approved, there are not expected to be any future meetings of shareholders of
the Fund, as that approval would result in shareholders of the Fund becoming
shareholders of the Acquiring Fund, which has its own Board of Directors. The
Fund's Agreement and Declaration of Trust provides that it will not be required
to hold meetings of shareholders if the election of Trustees is not required
under the 1940 Act. It is the present intention of the Board of Trustees of the
Fund not to hold annual meetings of shareholders unless such shareholder action
is required. Accordingly, Trustees elected at the Special Meeting will hold
office until the Fund is required by law to hold an election of Trustees and
successor Trustees are elected and qualify.
As nominees for election to the Board of Trustees of the Fund, the persons
named below have consented to be named in this Proxy Statement and to serve as
Trustees if elected. The Board of Trustees has no reason to believe that any
nominee will become unavailable for election as a Trustee, but if that should
occur before the Meeting, proxies will be voted for such other persons as the
Board of Trustees may recommend.
The Trustees and Officers of the Fund are listed below, together with
their respective positions, and a brief statement of their principal occupations
during the past five years and, in the case of Trustees, their positions with
certain international organizations and publicly held companies. As of December
12, 2000, the executive officers and Trustees of the Fund, as a group
beneficially owned [2,597,483 shares or 1.62%)] of the DLJ Opportunity Funds
[138,687 shares or .28%] of the DLJ Focus Funds, and [40,828 shares or 1.07%] of
the DLJ Select Funds.
The persons who have been nominated for election to serve as Trustee are:
Richard H. Francis, Jack W. Fritz, Jeffrey E. Garten, Peter F. Krogh, James S.
Pasman, William W. Priest, Steven N. Rappaport and James P. McCaughan. Mr. Krogh
is a current member of the Board of Trustees.
These individuals were recommended by CSAM and, after consideration in
executive session, were nominated by those members of the present Board of
Trustees of the Fund who are not "interested persons" of the Fund, as defined in
the 1940 Act. The nominees for election, who are listed above, include six
persons who currently serve as trustees or directors of other funds advised by
CSAM. In order to achieve consistency among the Funds advised by CSAM, CSAM has
recommended that shareholder interests can more effectively be represented by a
single board with responsibility for overseeing substantially all of the CSAM
funds. CSAM also suggested that creation of a single, consolidated board should
also provide certain administrative efficiencies and potential future cost
savings for both the Fund and CSAM.
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<TABLE>
<CAPTION>
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
--------------------------------------------- ------------------------------------------------- --------------------------
<S> <C> <C>
G. Moffett Cochran** 49 President, Managing Director and Member of the 10,516
Chairman of the Board and Management Committee of CSAM; former Chairman
President of DLJAM, with which he had been associated
277 Park Avenue since prior to 1993; formerly Senior Vice
New York, NY 10172 President with Bessemer Trust Companies.
Trustee of DLJ High Yield Bond Fund. Trustee
of DLJ Funds since 1994.
Robert E. Fischer ** 70 Partner at the law firm of Wolf, Block, Schorr 19,574.468
Trustee and Solis-Cohen LLP (or its predecessor firm),
250 Park Avenue, Suite 10000 since prior to 1993. Trustee of DLJ High
New York, NY 10107 Yield Bond Fund. Trustee of DLJ Funds since
1995.
Richard H. Francis 67 Currently retired; Executive Vice President [ ]
Nominee for Trustee and Chief Financial Officer of Pan Am
40 Grosvenor Road Corporation and Pan American World Airways,
Short Hills, NJ 07078 Inc. from 1988 to 1991; Director of the
Infinity Mutual Funds, BISYS
Group Incorporated;
Director/Trustee of other
Warburg Pincus Funds and other
CSAM-advised investment
companies.
Stig Host 73 Oil company executive; Member of the [ ]
Trustee Boards-International Energy Corp.,
The Corinthian, Suite 312 International Marine Sales, Inc., Kriti
345 E. 37th Street Exploration Inc., Kriti Alliance International
New York, NY 10016 Fund, DLJ Focus Funds, Alliance New Europe
Fund, Alliance All Asia
Investment Fund, Alexander Host
Foundation, American
Scandinavian Foundation, Trustee
of DLJ High Yield Bond Fund.
Trustee of DLJ Funds since 1986.
Jack W. Fritz 72 Private investor; Consultant and Director of [ ]
Nominee for Trustee Fritz Broadcasting, Inc. and Fritz
2425 North Fish Creek Road Communications (developers and operators of
P.O. Box 483 radio stations); Director of Advo, Inc.
Wilson, Wyoming 83014 (direct mail advertising); Director/Trustee of
other Warburg Pincus Funds.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
--------------------------------------------- ------------------------------------------------- --------------------------
<S> <C> <C>
Jeffrey E. Garten 53 Dean of Yale School of Management and William [ ]
Nominee for Trustee S. Beinecke Professor in the Practice of
Box 208200 International Trade and Finance;
New Haven, CT 06520-8200 Undersecretary of Commerce for International
Trade from November 1993 to
October 1995; Professor at
Columbia University from
September 1992 to November 1993;
Director of Aetna, Inc.;
Director/Trustee of other
Warburg Pincus Funds.
Martin Jaffe** 53 Chief Financial Officer, Managing Director and [ ]
Trustee, Vice President, Member of the Management Committee of CSAM;
Secretary & Treasurer former Chief Operating Officer of DLJAM, with
277 Park Avenue which he had been associated since prior to
New York, NY 10172 1993. Trustee of DLJ High Yield Bond Fund.
Trustee of DLJ Funds since 1995.
Wilmot H. Kidd, III 58 President of Central Securities Corporation, [ ]
Trustee since prior to 1993. Trustee of DLJ High
375 Park Avenue Yield Bond Fund. Trustee of DLJ Funds since
New York, NY 10112 1995.
Peter F. Krogh 63 Dean Emeritus and Distinguished Professor of [ ]
Trustee /Nominee for Trustee International Affairs at the Edmund A. Walsh
301 ICC School of Foreign Service, Georgetown
Georgetown University University; Moderator of PBS foreign affairs
Washington, DC 20057 television series; Member of Board of The
Carlisle Companies Inc. Member of Selection
Committee for Harry Truman Scholars and Henry
Luce Scholars. Senior Associate of Center for
Strategic and International Studies; Trustee
of numerous world affairs organizations and
DLJ High Yield Bond Fund. Trustee of DLJ
Funds since 1986.
</TABLE>
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<TABLE>
<CAPTION>
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
--------------------------------------------- ------------------------------------------------- --------------------------
<S> <C> <C>
James P. McCaughan __ Chief Executive Officer, Managing Director and [ ]
Nominee for Trustee Chairman of the Management Committee of CSAM;
c/o CSAM President and Chief Operating Officer of
466 Lexington Avenue Oppenheimer Capital from [_____]; President
New York, NY 10017 and Chief Executive Officer of UBS Asset
Management (New York) from __ to
___; President, UBS
International Investment from __
to __; Fellow, English Institute
of Actuaries.
James S. Pasman, Jr. 70 Currently retired; President and Chief [ ]
Nominee for Trustee Operating Officer of National InterGroup, Inc.
29 The Trillium from April 1989 to March 1991; Chairman of
Pittsburgh, PA 15238 Permian Oil Co. from April 1989 to March 1991;
Director of Education Management Corp., Tyco
International Ltd.; Trustee, BT Insurance
Funds Trust; Director/Trustee of other Warburg
Pincus Funds and other CSAM-advised investment
companies.
William W. Priest** 58 Chairman and Managing Director of CSAM since [ ]
Nominee for Trustee 2000; Chief Executive Officer and Managing
c/o CSAM Director of CSAM from 1990 to 2000;
466 Lexington Avenue Director/Trustee of other Warburg Pincus Funds
New York, NY 10017 and other CSAM-advised investment companies.
John J. Sheehan 69 Owns own consulting firm; Former President and [ ]
Trustee CEO of National Computer Analysts, Inc.,
4 Bennington Place Principal Negotiator for NCA, Director of
Newtown, PA 18940 National Accounts for large Financial
Institutions Group. Trustee of DLJ High Yield
Bond Fund. Trustee of DLJ Funds since 1972.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
--------------------------------------------- ------------------------------------------------- --------------------------
<S> <C> <C>
Steven N. Rappaport 51 President of Loanet, Inc. since 1997; [ ]
Nominee for Trustee Executive Vice President of Loanet, Inc. from
Loanet, Inc. 1994 to 1997; Director, President, North
40 East 52nd Street American Operations, and former Executive Vice
New York, NY 10022 President from 1992 to 1993 of Worldwide
Operations of Metallurg Inc.; Executive Vice
President, Telerate, Inc. from 1987 to 1992;
Partner in the law firm of Hartman & Craven
until 1987; Director/Trustee of other Warburg
Pincus Funds and other CSAM-advised investment
companies.
Richard J. Hanlon 34 Director of CSAM; previously Senior Vice [ ]
Vice President President of DLJAM, with which he had been
277 Park Avenue associated since 1994. Prior to his becoming
New York, NY 10172 associated with DLJ Mutual Funds and the
Adviser, Mr. Hanlon was a portfolio manager at
Manufacturers Hanover/Chemical Bank.
Cathy A. Jameson 46 Managing Director of CSAM; previously Managing [ ]
Vice President Director of DLJAM with which she had been
277 Park Avenue associated since prior to 1993.
New York, NY 10172
Brian A. Kammerer 43 Director of CSAM; previously Senior Vice [ ]
Vice President President of DLJAM with which he had been
277 Park Avenue associated since prior to 1993.
New York, NY 10172
Marybeth B. Leithead 37 Director of CSAM; previously Senior Vice [ ]
Vice President President of DLJAM, with which she had been
277 Park Avenue associated since 1993.
New York, NY 10172
Hugh M. Neuburger 56 Managing Director of CSAM; previously Managing [ ]
Vice President Director of DLJAM, with which he had been
277 Park Avenue associated since March 1995. Prior to his
New York, NY 10172 association with DLJ Winthrop Focus Funds and
the Adviser, Mr. Neuburger was the President
of Hugh M. Neuburger, Inc., a consulting firm.
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Position Principal Occupations Shares Beneficially Owned
with the Fund, and Address and Other Affiliations as of December ___, 2000*
--------------------------------------------- ------------------------------------------------- --------------------------
<S> <C> <C>
Roger W. Vogel 43 Managing Director of CSAM; previously Managing [ ]
Vice President Director of DLJAM, a position he held since
277 Park Avenue July 1993.
New York, NY 10172
</TABLE>
----------
* This information has been furnished by each Trustee and Officer.
** "Interested" Trustee within the meaning of the 1940 Act. Mr. Cochran and
Mr. Jaffe are "interested" Trustees because of their affiliation with
CSAM, which acts as the Fund's investment adviser. If elected, Mr. Priest
and Mr. McCaughan each will be an "interested" Trustee because of his
affiliation with CSAM, which acts as the Fund's investment adviser.
There were four regular meetings and two special meetings of the Board of
Trustees of DLJ Select Funds held during the fiscal year ended October 31, 2000.
Aggregate fees and expenses paid to the Board of Trustees for the fiscal year
ended October 31, 2000 were $16,500 for the DLJ Select Funds.
The Board of Trustees has an Audit Committee. The Audit Committee makes
recommendations to its full Board of Trustees with respect to the engagement of
independent auditors and reviews with the independent auditors the plan and
results of the audit engagement and matters having a material effect on the
Fund's financial operations. The members of the Audit Committee are Messrs.
Fischer, Host, Kidd, Krogh and Sheehan. Each member of the Audit Committee is a
"non-interested" Trustee. The Audit Committee met two times during the fiscal
year ended October 31, 2000. The Board of Trustees has an Executive Committee
consisting of Messrs. Cochran and Jaffe. The Executive Committee is authorized
to act for the entire Board between meetings thereof, to the extent permitted
under the Agreement and Declaration of Trust and applicable law. The Executive
Committee did not meet during the fiscal year ended October 31, 2000. The Board
of Trustees does not have a Nominating Committee.
The following table sets forth certain information regarding the
compensation of the Fund's Trustees for the fiscal year ended October 31, 2000.
No persons (other than the Trustees who are not "interested" within the meaning
of the 1940 Act, as set forth below) currently receive compensation from the
Fund for acting as a Trustee or Officer. Trustees and executive officers of the
Fund do not receive pension or retirement benefits from the Fund. Trustees
receive reimbursement for travel and other out-of-pocket expenses incurred in
connection with board meetings.
-33-
<PAGE>
COMPENSATION TABLE
for the
Fiscal Year Ended October 31, 2000
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from Fund
Name of Person and Position From the Fund and Fund Complex Paid to Trustees
--------------------------------- ------------------------- ------------------------------------
<S> <C> <C>
G. Moffett Cochran*
Chairman of the Board
DLJ Select Funds $0 $0
Robert E. Fischer, Trustee
DLJ Select Funds $4,750 $32,500
Stig Host, Trustee
DLJ Select Funds $2,250 $22,000
Martin Jaffe, Trustee*
DLJ Select Funds $0 $0
Wilmot H. Kidd III, Trustee
DLJ Select Funds $4,750 $32,500
Peter F. Krogh, Trustee
DLJ Select Funds $2,250 $22,000
John J. Sheehan, Trustee
DLJ Select Funds $1,750 $19,000
John W. Waller III, Former Trustee
DLJ Select Funds $2,000 $14,000
</TABLE>
Independent Trustees are not eligible for retirement benefits or other
payments upon their retirement from the Board of Trustees. A one-time benefit
payment of $50,000 is being made by CSAM to each Trustee who has agreed to leave
the Board prior to the time he would have otherwise retired in order to
facilitate the nomination of a consolidated Board for all funds managed by CSAM.
As of October 31, 2000, the Fund Complex consisted of three open-end
investment companies (DLJ Focus Funds, DLJ Opportunity Funds and DLJ Select
Funds) with a total of 12 series and one closed-end investment company (DLJ High
Yield Bond Fund).
Required Vote
In the election of the Trustees of the DLJ Select Funds, the candidates
receiving a plurality of the votes cast at the Meeting in person or by proxy
without regard to class or series, if a quorum is present, shall be elected.
----------
* "Interested" Trustees.
-34-
<PAGE>
THE BOARD OF TRUSTEES OF THE FUND RECOMMENDS THAT
YOU VOTE FOR PROPOSAL NO. 3.
-35-
<PAGE>
ADDITIONAL INFORMATION
The Acquiring Fund and the Fund are each subject to the informational
requirements of the 1934 Act and the 1940 Act and in accordance therewith file
reports and other information including proxy material, reports and charter
documents, with the SEC. These materials can be inspected and copies obtained at
the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the New York Regional Office of the SEC at 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C. 20549 at prescribed rates. The
Prospectuses and the Statement of Additional Information for the Acquiring Fund,
along with related information, may be found on the SEC website as well
(http://www.sec.gov).
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Trustees of the Fund to be used at the
Special Meeting of Shareholders of the Fund to be held at [10:00 a.m.] on March
23, 2001, at the offices of the Fund, 277 Park Avenue, New York, New York 10172
and at any adjournment(s) thereof. This Prospectus/Proxy Statement, along with a
Notice of the Meeting and proxy card(s), is first being mailed to shareholders
of the Fund on or about February 1, 2001. Only shareholders of record as of the
close of business on January 31, 2001 will be entitled to notice of, and to vote
at, the Special Meeting or any adjournment thereof. As of January 31, 2001, the
Fund had the following shares outstanding and entitled to vote: ___________. For
Proposal Number 1 and Number 2, the holders of a majority of the shares of the
Fund outstanding at the close of business on January 31, 2001 present in person
or represented by proxy will constitute a quorum for the Special Meeting of the
Fund. For Proposal Number 3, the holders of a majority of the shares of the DLJ
Select Funds outstanding at the close of business on January 31, 2001 present in
person or represented by proxy will constitute a quorum for the Special Meeting
of the Fund. The total number of shares of the DLJ Select Funds entitled to vote
on Proposal Number 3, including shares of the Fund, is: ________. For purposes
of determining a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. For this
reason, abstentions and broker non-votes will have the effect of a vote against
the Plan for purposes of obtaining the requisite approval of the Plan because
they are not affirmative votes. Abstentions and broker non-votes will have a
similar effect on the outcome of Proposal Number 2, but will not affect the
outcome of Proposal Number 3. If the enclosed proxy is properly executed and
returned in time to be voted at the Special Meeting, the proxies named therein
will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Executed, but unmarked proxies (i.e., executed
proxies in which there is no indication of the shareholder's voting
instructions) will be voted FOR approval of the Plan, FOR approval of the New
Investment Advisory Agreement, FOR the election of Trustees and FOR approval of
any other matters deemed appropriate. A proxy may be revoked at any time on or
before the Special Meeting by the subsequent execution and submission of a
revised proxy, by written notice to Martin Jaffe, Secretary of the Fund, 277
Park Avenue, New York, New York 10172 or by voting in person at the Special
Meeting.
CSAM has retained D.F. King & Co. to solicit proxies. Proxy solicitations
will be made primarily by mail, but proxy solicitations also may be made by
telephone, facsimile or personal interviews conducted by officers and employees
of CSAM and its affiliates. All expenses of the Acquisition, which are currently
estimated to be $[_________], including the costs of the proxy solicitation and
the preparation of enclosures to the Prospectus/Proxy Statement, reimbursement
of expenses of forwarding solicitation material to beneficial owners of shares
of the Fund and expenses
-36-
<PAGE>
incurred in connection with the preparation of this Prospectus/Proxy Statement,
will be borne by CSAM or its affiliates (excluding extraordinary expenses not
normally associated with transactions of this type). It is anticipated that
banks, brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward proxy materials to beneficial owners and to obtain
authorization for the execution of proxies. CSAM or its affiliates, may, upon
request, reimburse banks, brokerage houses and other institutions, nominees and
fiduciaries for their expenses in forwarding proxy materials to beneficial
owners.
In the event that a quorum necessary for any proposal the Special Meeting
is not present or sufficient votes to approve any proposal are not received
prior to 10:00 a.m. on March 23, 2001, the persons named as proxies may propose
one or more adjournments of the Special Meeting to permit further solicitation
of proxies with respect to any proposal which did not receive the vote necessary
for its passage or to obtain a quorum. With respect to any proposal for which
there is represented a sufficient number of votes in favor, an act taken at the
Special Meeting will be effective irrespective of any adjournments with respect
to any other proposal. In determining whether to adjourn the Special Meeting,
the following factors may be considered: the percentage of votes actually cast,
the percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any such adjournment will require an
affirmative vote by the holders of a majority of the shares of the Fund present
in person or by proxy and entitled to vote at the Special Meeting. The persons
named as proxies will vote upon a decision to adjourn the Special Meeting after
consideration of the best interests of all shareholders of the Fund.
As of January 31, 2001, CSAM (or its affiliates) possessed or shared
voting power or investment power as a fiduciary on behalf of its customers, with
respect to the Fund as set forth above under "Proposal Number 1 - Information
About the Acquisition -- Share Ownership of the Fund." CSAM and its affiliates
have advised the Fund that they intend to vote the shares over which they have
voting power at the Meeting, including shares that are held directly or on
behalf of employees: in the manner instructed by the customers or employees for
which such shares are held.
OTHER BUSINESS
The Board of Trustees knows of no other business to be brought before the
Special Meeting. However, if any other matters come before the Special Meeting,
proxies that do not contain specific restrictions to the contrary will be voted
on such matters in accordance with the judgment of the persons named in the
enclosed Proxy Card(s).
The approval of shareholders of the Acquiring Fund is not required in
order to affect the Acquisition and, accordingly, the votes of the shareholders
of the Acquiring Fund are not being solicited by this Prospectus/Proxy
Statement.
FINANCIAL STATEMENTS AND EXPERTS
The audited statement of assets and liabilities of the Fund as of October
31, 2000, and the Acquiring Fund as of August 31, 2000, including their
respective schedules of portfolio investments, and the related statements of
operations for the year and/or period then ended, the statement of changes in
net assets for each of the two years in the period then ended (or such shorter
period as the relevant Fund has been in existence) and the financial highlights
for each of the five years (or such shorter period as the relevant Fund, or
share class, has been in existence) in the period then ended, have been
incorporated by reference into this Prospectus/Proxy Statement in reliance upon
the reports of Ernst & Young LLP, in the case of the Fund, and
PricewaterhouseCoopers LLP, in the case of the Acquiring Fund, independent
accountants, given on the authority of such firm as experts in accounting and
auditing.
-37-
<PAGE>
ADDITIONAL MATERIALS
The following additional materials, which have been incorporated by
reference into the Statement of Additional Information dated __________, 2001
relating to this Prospectus/Proxy Statement and the Acquisition, will be sent to
all shareholders of the Fund requesting a copy of such Statement of Additional
Information.
1. The current Statement of Additional Information for the Acquiring Fund,
dated February 29, 2000.
2. The current Statement of Additional Information for the Fund, dated August
1, 2000.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Acquiring
Fund will be passed upon by Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019-6099, counsel to the Acquiring Fund. In rendering such
opinion, Willkie Farr & Gallagher may rely on an opinion of Venable Baetjer and
Howard, L.L.P. as to certain matters under Maryland law.
-38-
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this ___ day of [INSERT], 2001, between and among Warburg, Pincus Focus Fund,
Inc., a Maryland corporation (the "Acquiring Fund"), and DLJ Select Funds, a
Delaware business trust (the "Trust"), for and on behalf of its DLJ Strategic
Growth Fund series (the "Fund"), and, solely for purposes of Section 9.2 hereof,
Credit Suisse Asset Management, LLC, a limited liability company organized under
the laws of the State of Delaware ("CSAM").
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization of
the Fund (collectively, the "Reorganization") will consist of the transfer of
all of the assets of the Fund in exchange solely for shares of the applicable
class or classes of common stock (collectively, the "Shares") of the Acquiring
Fund, and the assumption by the Acquiring Fund of liabilities of the Fund, and
the distribution, on or after the Closing Date hereinafter referred to, of
Shares of the Acquiring Fund ("Acquiring Fund Shares") to the shareholders of
the Fund in liquidation of the Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Board of Trustees of the Trust has determined that the
exchange of all of the assets of the Fund for Acquiring Fund Shares and the
assumption of the liabilities of the Fund by the Acquiring Fund is in the best
interests of the Fund and that the interests of the existing shareholders of the
Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Directors of the Acquiring Fund has determined that
the exchange of all of the assets of the Fund for Acquiring Fund Shares is in
the best interests of the Acquiring Fund's shareholders and that the interests
of the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Transfer of Assets of the Fund in Exchange for Acquiring Fund Shares
and Assumption of the Fund's Liabilities and Liquidation of the Fund
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Fund agrees to
transfer its assets as set forth in paragraph 1.2 to the Acquiring Fund, and the
Acquiring Fund agrees in exchange therefor: (i) to deliver to the Fund the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, of
each class of the Fund determined by dividing the value of the Fund's net assets
attributable to each such class of shares, computed in the manner and as of the
time and date set forth in paragraph 2.1, by the net asset value of one
Acquiring Fund Share of the applicable class; and (ii) to assume the liabilities
of the Fund, as set forth in paragraph 1.3. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2. (a) The assets of the Fund to be acquired by the Acquiring Fund shall
consist of all property including, without limitation, all cash, securities and
dividend or interest receivables that are owned by or owed to the Fund and any
deferred or prepaid expenses shown as an asset on the books of the Fund on the
Closing date provided in paragraph 3.1 (the "Closing Date").
(b) The Trust has provided the Acquiring Fund with a list of all of the
Fund's assets as of the date of execution of this Agreement. The Trust reserves
the right to sell any of these securities but will not, without the prior
approval of the Acquiring Fund, acquire any additional securities other than
securities of the type in which the Acquiring Fund is permitted to invest. The
Trust will, within a reasonable time prior to the Closing Date, furnish the
Acquiring Fund with a list of the securities, if any, on the Fund's list
referred to in the first sentence of this paragraph which do not conform to the
Acquiring Fund's investment objective, policies and restrictions. In the
A-1
<PAGE>
event that the Fund holds any investments which the Acquiring Fund may not hold,
the Fund will dispose of such securities prior to the Closing Date. In addition,
if it is determined that the portfolios of the Fund and the Acquiring Fund, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the Acquiring Fund with respect to such investments, the Fund, if
requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient
amount of such investments as may be necessary to avoid violating such
limitations as of the Closing Date.
1.3. The Trust will endeavor to discharge all of the known liabilities and
obligations of the Fund prior to the Closing Date, other than those liabilities
and obligations which would otherwise be discharged at a later date in the
ordinary course of business. The Acquiring Fund shall assume all liabilities,
expenses, costs, charges and reserves, including those liabilities reflected on
unaudited statements of assets and liabilities of the Fund and the Acquiring
Fund prepared by PFPC, Inc. ("PFPC"), the accounting agent of each Fund, as of
the Valuation Date (as defined in paragraph 2.1), in accordance with generally
accepted accounting principles consistently applied from the prior audited
period. The Acquiring Fund shall also assume any liabilities, expenses, costs or
charges incurred by or on behalf of the Fund specifically arising from or
relating to the operations and/or transactions of the Fund prior to and
including the Closing Date but which are not reflected on the above-mentioned
statement of assets and liabilities, including any liabilities, expenses, costs
or charges arising under paragraph 5.10 hereof.
1.4. As soon on or after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Fund will liquidate and distribute pro rata to the
Fund's shareholders of record determined as of the close of business on the
Closing Date (the "Fund Shareholders") the Acquiring Fund Shares it receives
pursuant to paragraph 1.1. Such liquidation and distribution will be
accomplished by the transfer of the Acquiring Fund Shares then credited to the
account of the Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the name of the Fund's shareholders
representing the respective pro rata number of the Acquiring Fund Shares due
such shareholders. All issued and outstanding shares of the Fund will
simultaneously be canceled on the books of the Fund, although share certificates
representing interests in the Fund will represent a number of Acquiring Fund
Shares after the Closing Date as determined in accordance with Section 2.2. The
Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued in
the manner described in the Acquiring Fund's current prospectuses and statement
of additional information.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of the Fund Shares on the books of
the Fund as of that time shall, as a condition of such issuance and transfer, be
paid by the person to whom such Acquiring Fund Shares are to be issued and
transferred.
1.7. Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the applicable Closing Date and
such later date on which the Fund is terminated.
2. Valuation
2.1. The value of the Fund's assets to be acquired hereunder shall be the
value of such assets computed as of the close of regular trading on The New York
Stock Exchange, Inc. (the "NYSE") on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Fund's then current prospectus or statement of additional
information.
2.2. (a) The number of Shares of the Common Class of the Acquiring Fund to
be issued (including fractional shares, if any) in exchange for Class A shares
of the Fund shall be determined by dividing the value of the net assets of the
Fund attributable to its Class A shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Common Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
A-2
<PAGE>
(b) The number of Shares of the Common Class of the Acquiring Fund to be
issued (including fractional shares, if any) in exchange for Class R shares of
the Fund shall be determined by dividing the value of the net assets of the Fund
attributable to its Class R shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Common Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
(c) The number of Shares of the Common Class of the Acquiring Fund to be
issued (including fractional shares, if any) in exchange for Class B shares of
the Fund shall be determined by dividing the value of the net assets of the Fund
attributable to its Class B shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Common Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
(c) The number of Shares of the Common Class of the Acquiring Fund to be
issued (including fractional shares, if any) in exchange for Class C shares of
the Fund shall be determined by dividing the value of the net assets of the Fund
attributable to its Class C shares determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value per Share of the
Common Class of the Acquiring Fund computed as of the close of regular trading
on the NYSE on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's then current prospectuses or statement of additional
information.
2.3. All computations of value with respect to the Acquiring Fund and the
Fund shall be made by PFPC in accordance with its regular practice as pricing
agent for the Acquiring Fund.
3. Closing and Closing Date
3.1. The Closing Date for the Reorganization shall be March 30, 2001, or
such other date as the parties to such Reorganization may agree to in writing.
All acts taking place at the Closing shall be deemed to take place
simultaneously as of the close of trading on the NYSE on the Closing Date unless
otherwise provided. The Closing shall be held as of [10:00 a.m.], at the offices
of [Sullivan & Cromwell] or at such other time and/or place as the parties may
agree.
3.2. The custodian for the Acquiring Fund (the "Custodian") shall deliver
at the Closing a certificate of an authorized officer stating that: (a) the
Fund's portfolio securities, cash and any other assets have been delivered in
proper form to the Acquiring Fund on the Closing Date and (b) all necessary
taxes, including all applicable federal and state stock transfer stamps, if any,
have been paid, or provision for payment has been made, in conjunction with the
delivery of portfolio securities.
3.3. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Fund shall be closed to trading or trading thereon shall be restricted or (b)
trading or the reporting of trading on the NYSE or elsewhere shall be disrupted
so that accurate appraisal of the value of the net assets of the Acquiring Fund
or the Fund is impracticable, the applicable Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.4. The Trust, on behalf of the Fund, shall deliver at the Closing a list
of the names and addresses of the Fund's shareholders and the number and class
of outstanding Shares owned by each such shareholder immediately prior to the
Closing or provide evidence that such information has been provided to the
Acquiring Fund's transfer agent. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited to the Fund's
account on the Closing Date to the Secretary of the Fund or provide evidence
satisfactory to the Fund that such Acquiring Fund Shares have been credited to
the Fund's account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the relevant other parties such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
A-3
<PAGE>
4. Representations and Warranties
4.1. The Trust, on behalf of the Fund, represents and warrants to the
Acquiring Fund as follows:
(a) The Fund is a duly established series of the Trust; the Trust is a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware;
(b) The Trust is a registered investment company classified as a
management company of the open-end type and its registration with the Securities
and Exchange Commission (the "Commission") as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), is in full force
and effect;
(c) The Trust is not, and the execution, delivery and performance of this
Agreement by the Trust on behalf of the Fund will not result, in a violation of
its Agreement and Declaration of Trust or By-Laws or any material agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust,
with respect to the Fund, is a party or by which the Trust, with respect to the
Fund, or its property is bound or affected;
(d) There are no contracts or other commitments (other than this
Agreement) of the Trust which will be terminated with liability to the Fund
prior to the Closing Date;
(e) Except as previously disclosed in writing to and accepted by the
Acquiring Fund, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or to its
knowledge threatened against the Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Trust knows of no facts which
might form the basis for the institution of such proceedings and is not party to
or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or the
business of the Fund or its ability to consummate the transactions herein
contemplated;
(f) The Statements of Assets and Liabilities, including the Investment
Portfolio, Operations, and Changes in Net Assets, and the Financial Highlights
of the Fund at October 31, 2000 and for the period from November 18, 1999
(commencement of operations) to October 31, 2000 have been audited by Ernst &
Young LLP, independent accountants, and are in accordance with generally
accepted accounting principles consistently applied, and such statements (copies
of which have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Fund as of such dates, and there are no known contingent
liabilities of the Fund as of such dates not disclosed therein;
(g) Since October 31, 2000, there has not been any material adverse change
in the Fund's financial condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any incurrence by the
Fund of indebtedness maturing more than one year from the date such indebtedness
was incurred except as otherwise disclosed to and accepted in writing by the
Acquiring Fund. For purposes of this subsection (g), a decline in net asset
value per share of the Fund due to declines in market values of securities in
the Fund's portfolio, the discharge of Fund liabilities, or the redemption of
the Fund shares by Fund shareholders shall not constitute a material adverse
change;
(h) At the date hereof and the Closing Date, all federal and other tax
returns and reports, including extensions, of the Fund required by law to have
been filed by such dates shall have been filed, and all federal and other taxes
shall have been paid so far as due, or provision shall have been made for the
payment thereof and, to the best of the Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Fund has met the requirements of Subchapter M
of the Code for qualification and treatment as a regulated investment company;
all of the Fund's issued and outstanding shares have been offered and sold in
compliance in all material respects with applicable federal and state securities
laws;
A-4
<PAGE>
(j) All issued and outstanding shares of each class of the Fund are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and, except as set forth in the Fund's Declaration of Trust, non-assessable, by
the Fund. All of the issued and outstanding shares of the Fund will, at the time
of Closing, be held by the persons and in the amounts set forth in the records
of the transfer agent as provided in paragraph 3.4. The Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of the Fund's shares, nor is there outstanding any security convertible into
any of the Fund's shares, except for the conversion feature with respect to
Class B shares of the Fund;
(k) At the Closing Date, the Trust will have good and marketable title to
the Fund's assets to be transferred to the Acquiring Fund pursuant to paragraph
1.2 and full right, power and authority to sell, assign, transfer and deliver
such assets hereunder and, upon delivery and payment for such assets, the
Acquiring Fund will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, except such restrictions as might
arise under the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act with respect to privately placed or otherwise restricted securities
that the Fund may have acquired in the ordinary course of business and of which
the Acquiring Fund has received notice and necessary documentation at or prior
to the Closing;
(l) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of the Trust's Board of
Trustees, and subject to the approval of the Fund's shareholders, this Agreement
will constitute a valid and binding obligation of the Trust, on behalf of the
Fund, enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(m) The information to be furnished by the Trust, on behalf of the Fund
for use in applications for orders, registration statements or proxy materials
or for use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the National Association of Securities
Dealers, Inc.), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of the
Fund conform in all material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Commission thereunder
and do not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading; and
(o) Insofar as the following relate to the Fund, the registration
statement filed by the Acquiring Fund on Form N-14 relating to Acquiring Fund
Shares that will be registered with the Commission pursuant to this Agreement,
which, without limitation, shall include a proxy statement of the Fund (the
"Proxy Statement") and the prospectuses of the Acquiring Fund with respect to
the transactions contemplated by this Agreement, and any supplement or amendment
thereto, and the documents contained or incorporated therein by reference (the
"N-14 Registration Statement"), on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein, on the
Valuation Date and on the Closing Date: (i) shall comply in all material
respects with the provisions of the 1933 Act, the Securities Exchange Act of
1934 (the "1934 Act") and the 1940 Act and the rules and regulations under those
Acts, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the representations
and warranties in this section shall not apply to statements in or omissions
from the Proxy Statement and the N-14 Registration Statement made in reliance
upon and in conformity with information that was furnished or should have been
furnished by the Acquiring Fund for use therein.
4.2. The Acquiring Fund represents and warrants to the Fund as follows:
(a) The Acquiring Fund is a Maryland corporation, duly organized, validly
existing and in good standing under the laws of the State of Maryland;
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(b) The Acquiring Fund is a registered investment company classified as a
management company of the open-end type and its registration with the Commission
as an investment company under the 1940 Act is in full force and effect;
(c) The current prospectuses and statement of additional information filed
as part of the Acquiring Fund registration statement on Form N-1A (the
"Acquiring Fund Registration Statement") conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission under those Acts and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good and marketable
title to its assets;
(e) The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not result, in a violation of its Charter or By-Laws or
any material agreement, indenture, instrument, contract, lease or other
undertaking to which the Acquiring Fund is a party or by which the Acquiring
Fund or its property is bound;
(f) Except as previously disclosed in writing to and accepted by the Fund,
no litigation or administrative proceeding or investigation of or before any
court or governmental body is presently pending or to its knowledge threatened
against the Acquiring Fund or any of its properties or assets which, if
adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Acquiring Fund knows of no facts
which might form the basis for the institution of such proceedings and is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its business
or its ability to consummate the transactions contemplated herein;
(g) Since October 31, 2000, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred except as otherwise disclosed to
and accepted in writing by the Fund. For purposes of this subsection (g), a
decline in net asset value per share of the Acquiring Fund due to declines in
market values of securities in the Acquiring Fund's portfolio, the discharge of
Acquiring Fund liabilities, or the redemption of Acquiring Fund Shares by
Acquiring Fund Shareholders shall not constitute a material adverse change;
(h) At the Closing Date, all federal and other tax returns and reports,
including extensions, of the Acquiring Fund required by law then to be filed
shall have been filed, and all federal and other taxes shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof;
(i) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquiring Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code;
(j) At the date hereof, all issued and outstanding Acquiring Fund Shares
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable, with no personal liability attaching to the
ownership thereof. The Acquiring Fund does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Fund Shares,
nor is there outstanding any security convertible into any Acquiring Fund
Shares;
(k) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of the Acquiring Fund's
Board of Directors, and this Agreement will constitute a valid and binding
obligation of the Acquiring Fund enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
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(l) The Acquiring Fund Shares to be issued and delivered to the Fund, for
the account of the Fund's shareholders, pursuant to the terms of this Agreement,
will at the Closing Date have been duly authorized and when so issued and
delivered, will be duly and validly issued Acquiring Fund Shares, and will be
fully paid and non-assessable with no personal liability attaching to the
ownership thereof;
(m) Insofar as the following relate to the Acquiring Fund, the N-14
Registration Statement, on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein, on the
Valuation Date and on the Closing Date: (i) shall comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations under those Acts, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in this section shall
not apply to statements in or omissions from the Proxy Statement and the N-14
Registration Statement made in reliance upon and in conformity with information
that was furnished by the Fund for use therein; and
(n) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
5. Covenants of the Trust, with respect to the Fund, and the Acquiring
Fund
5.1. The Acquiring Fund and the Trust, with respect to the Fund, will
operate their respective businesses in the ordinary course between the date
hereof and the Closing Date. It is understood that such ordinary course of
business will include the declaration and payment of customary dividends and
distributions.
5.2. The Trust, on behalf of the Fund, will call a meeting of the
shareholders of the Fund to consider and act upon this Agreement and to take all
other actions necessary to obtain approval of the transactions contemplated
herein.
5.3. The Trust, on behalf of the Fund, covenants that the Acquiring Fund
Shares to be issued hereunder are not being acquired for the purpose of making
any distribution thereof other than in accordance with the terms of this
Agreement.
5.4. The Trust, on behalf of the Fund, will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Fund's Shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and
the Trust, on behalf of the Fund, will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
5.6. The Trust, on behalf of the Fund, will provide the Acquiring Fund
with information reasonably necessary for the preparation of a prospectus (the
"Prospectus") which will include the Proxy Statement referred to in paragraph
4.1(o), all to be included in the N-14 Registration Statement, in compliance
with the 1933 Act, the 1934 Act and the 1940 Act in connection with the meeting
of the Fund's shareholders to consider approval of this Agreement and the
transactions contemplated herein.
5.7. The Trust, on behalf of the Fund, will provide the Acquiring Fund
with information reasonably necessary for the preparation of the Acquiring Fund
Registration Statement.
5.8. As promptly as practicable, but in any case within thirty days of the
Closing Date, the Trust, on behalf of the Fund, shall furnish the Acquiring Fund
with a statement containing information required for purposes of complying with
Rule 24f-2 under the 1940 Act. A notice pursuant to Rule 24f-2 will be filed by
the Acquiring Fund offsetting redemptions by the Fund during the fiscal year
ending on or after the applicable Closing Date against sales of Acquiring Fund
Shares and the Fund agrees that it will not net redemptions during such period
by the Fund against sales of its shares.
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5.9. The Acquiring Fund agrees to indemnify and advance expenses to each
person who at the time of the execution of this Agreement serves as a Trustee or
Officer ("Indemnified Person") of the Fund, against money damages actually and
reasonably incurred by such Indemnified Person in connection with any claim that
is asserted against such Indemnified Person arising out of such person's service
as a Trustee or officer of the Fund with respect to matters specifically
relating to the Reorganization, provided that such indemnification and
advancement of expenses shall be permitted to the fullest extent that is
available under the Maryland General Corporation law and other applicable law.
This paragraph 5.9 shall not protect any such Indemnified Person against any
liability to the Fund, the Acquiring Fund or their shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or from reckless disregard of the duties involved in the conduct of
his office. An Indemnified Person seeking indemnification shall be entitled to
advances from the Acquiring Fund for payment of the reasonable expenses incurred
by him in connection with the matter as to which he is seeking indemnification
in the manner and to the fullest extent permissible under the Maryland General
Corporation law and other applicable law. Such Indemnified Person shall provide
to the Acquiring Fund a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Acquiring Fund has been
met and a written undertaking to repay any advance if it should ultimately be
determined that the standard of conduct has not been met. In addition, at least
one of the following additional conditions shall be met: (a) the Indemnified
Person shall provide security in form and amount acceptable to the Acquiring
Fund for its undertaking; (b) the Acquiring Fund is insured against losses
arising by reason of the advance; or (c) either a majority of a quorum of
disinterested non-party Directors of the Acquiring Fund (collectively, the
"Disinterested Directors"), or independent legal counsel experienced in mutual
fund matters, selected by the Indemnified Person, in a written opinion, shall
have determined, based on a review of facts readily available to the Acquiring
Fund at the time the advance is proposed to be made, that there is reason to
believe that the Indemnified Person will ultimately be found to be entitled to
indemnification.
5.10. The Acquiring Fund agrees to take no action that would adversely
affect the qualification of the Reorganization as a reorganization under Section
368(a) of the Code. In this regard, the Acquiring Fund covenants that, following
the Reorganization, it (a) will (i) continue the historic business of the Fund
or (ii) use a significant portion of the Fund's historic business assets in a
business, and (b) will not sell or otherwise dispose of any of the assets of the
Fund, except for dispositions in the ordinary course of business or transfers to
a corporation (or other entity classified for federal income tax purposes as an
association taxable as a corporation) that is "controlled" by the Acquiring Fund
within the meaning of Section 368(c) of the Code.
6. Conditions Precedent to Obligations of the Fund
The obligations of the Trust to consummate on behalf of the Fund, the
transactions provided for herein shall be subject, at its election, to the
performance by the Acquiring Fund of all of the obligations to be performed by
it hereunder on or before the Closing Date and, in addition thereto, the
following further conditions:
6.1. All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the actions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if made on
and as of the Closing Date;
6.2. The Acquiring Fund shall have delivered to the Fund a certificate
executed in its name by its President or Vice President and its Secretary,
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Fund
and dated as of the Closing Date, to the effect that the representations and
warranties of the Acquiring Fund made in this Agreement are true and correct at
and as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement and as to such other matters as the Fund shall
reasonably request;
6.3. The Fund shall have received a written agreement from CSAM to
reimburse expenses to the Acquiring Fund to the extent necessary to (a) maintain
the average annual expense ratio of the Common Class of the Acquiring Fund for
the two-year period beginning on the Closing Date at the lower of the average
annualized expense ratio of Class A, Class B, Class C or Class R shares of the
Fund or the Common Class measured over the 60-day period ended on such date; and
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6.4. The Fund shall have received on the Closing Date a favorable opinion
from Willkie Farr & Gallagher, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Fund, covering the
following points:
That (a) the Acquiring Fund is a validly existing corporation and in good
standing under the laws of the State of Maryland, has the corporate power to own
all of its properties and assets and to carry on its business as a registered
investment company; (b) the Agreement has been duly authorized, executed and
delivered by the Acquiring Fund and, assuming due authorization, execution and
delivery of the Agreement by the other parties thereto, is a valid and binding
obligation of the Acquiring Fund enforceable against the Acquiring Fund in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and to general equity principles; (c) the
Acquiring Fund Shares to be issued to the Fund's shareholders as provided by
this Agreement are duly authorized and upon such delivery will be validly issued
and outstanding and are fully paid and nonassessable with no personal liability
attaching to ownership thereof, and no shareholder of the Acquiring Fund has any
preemptive rights to subscription or purchase in respect thereof; (d) the
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, result in a violation of the
Acquiring Fund's Charter or By-Laws or in a material violation of any provision
of any material agreement (known to such counsel) to which the Acquiring Fund is
a party or by which it or its property is bound or, to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any material agreement, judgment, or decree to which the
Acquiring Fund is a party or by which it or its property is bound; (e) to the
knowledge of such counsel, no consent, approval, authorization or order of any
court or governmental authority of the United States or state of Maryland is
required for the consummation by the Acquiring Fund of the actions contemplated
herein, except such as have been obtained under the 1933 Act, the 1934 Act and
the 1940 Act, and such as may be required under state securities laws; (f) only
insofar as they relate to the Acquiring Fund, the descriptions in the Proxy
Statement of statutes, legal and governmental proceedings, investigations,
orders, decrees or judgments of any court or governmental body in the United
States and contracts and other documents, if any, are accurate and fairly
present the information required to be shown; (g) such counsel does not know of
any legal, administrative or governmental proceedings, investigation, order,
decree or judgment of any court or governmental body, only insofar as they
relate to the Acquiring Fund or its assets or properties, pending, threatened or
otherwise existing on or before the effective date of the N-14 Registration
Statement or the Closing Date, which are required to be described in the N-14
Registration Statement or to be filed as exhibits to the N-14 Registration
Statement which are not described and filed as required; (h) the Acquiring Fund
is registered as an investment company under the 1940 Act and its registration
with the Commission as an investment company under the 1940 Act is in full force
and effect; (i) the Proxy Statement, as of its date, and the Acquiring Fund
Registration Statement (except as to financial and statistical data contained
therein, as to which no opinion need be given), as of the date of the
effectiveness of the Registration Statement, appeared on their face to be
appropriately responsive in all material respects to the requirements of the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder; provided, however, that such counsel shall be entitled to state that
it does not assume any responsibility for the accuracy, completeness or fairness
of the Proxy Statement and the Acquiring Fund Registration Statement; and (j)
the Acquiring Fund Registration Statement is effective under the 1933 Act and
the 1940 Act and no stop-order suspending its effectiveness or order pursuant to
section 8(e) of the 1940 Act has been issued.
Such counsel may rely as to matters governed by the laws of the state of
Maryland on an opinion of Maryland counsel and/or certificates of officers or
directors of the Acquiring Fund. Such opinion also shall include such other
matters incident to the transaction contemplated hereby, as the Fund may
reasonably request.
In this paragraph 6.4, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not, except as specifically
stated above, to any exhibits or attachments thereto or to any documents
incorporated by reference therein.
7. Conditions Precedent to Obligations of the Acquiring Fund
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
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7.1. All representations and warranties by or on behalf of the Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2. The Trust shall have delivered to the Acquiring Fund a statement of
the Fund's assets and liabilities as of the Closing Date, certified by the
Treasurer or Assistant Treasurer of the Trust;
7.3. The Trust shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Trust made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as the
Acquiring Fund shall reasonably request; and
7.4. The Acquiring Fund shall have received on the Closing Date a
favorable opinion of Sullivan & Cromwell, counsel to the Trust, in a form
satisfactory to the Secretary of the Acquiring Fund, covering the following
points:
That (a) the Trust is a validly existing business trust and in good
standing under the laws of the State of Delaware and has the statutory power to
own all of its properties and assets and to carry on its business as a
registered investment company and the Fund is a duly established Series of the
Trust; (b) the Agreement has been duly authorized, executed and delivered by the
Trust and, assuming due authorization, execution and delivery of the Agreement
by the other parties hereto, is a valid and binding obligation of the Fund
enforceable against the Fund in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles; (c) the execution and delivery of the
Agreement did not, and the consummation of the transactions contemplated hereby
will not, (i) conflict with the Fund's Agreement and Declaration of Trust or
By-Laws or (ii) result in a default or breach of (A) the Interim Investment
Advisory Agreement, dated as of November 3, 2000, between the Trust and CSAM;
(B) the Custodian Contract, dated as of ____, between the Trust and Citibank,
N.A.; (C) the Distribution Agreement, dated as of December __, 2000, between the
Trust and CSAMSI; or (D) the agreements set forth in Annex A to this Agreement;
(d) to the knowledge of such counsel, no consent, approval, authorization or
order of any court or governmental authority of the United States or the state
of Delaware is required for the consummation by the Fund of the transactions
contemplated herein, except such as have been obtained under the 1933 Act, the
1934 Act and the 1940 Act, and such as may be required under state securities
laws; (e) the Proxy Statement (except as to financial and statistical data
contained therein, as to which no opinion need be given), as of its date,
appeared on its face to be appropriately responsive in all material respects to
the 1934 Act and the 1940 Act and the rules and regulations thereunder;
provided, however, that such counsel shall be entitled to state that it does not
assume any responsibility for the accuracy, completeness or fairness of the
Proxy Statement; (f) to the knowledge of such counsel, there is no legal,
administrative or governmental proceeding, investigation, order, decree or
judgment of any court or governmental body, only insofar as they relate to the
Fund or its assets or properties, pending, threatened or otherwise existing on
or before the effective date of the N-14 Registration Statement or the Closing
Date, which is required to be described in the N-14 Registration Statement or to
be filed as an exhibit to the N-14 Registration Statement which is not described
or filed as required or which materially and adversely affect the Fund's
business; and (g) the Fund is registered as an investment company under the 1940
Act, and, to our knowledge, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
With respect to all matters of Delaware law, such counsel shall be
entitled to state that, with the approval of the Acquiring Fund, they have
relied upon the opinion of Richards, Layton & Finger, and that their opinion is
subject to the same assumptions, qualifications and limitations with respect to
such matters as are contained in the opinion of [Richards, Layton & Finger].
Such opinion also shall include such other matters incident to the transaction
contemplated hereby as the Acquiring Fund may reasonably request.
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In this paragraph 7.4, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not to any exhibits or
attachments thereto or to any documents incorporated by reference therein.
7.5. The Acquiring Fund shall have received from Ernst & Young LLP a
letter addressed to the Acquiring Fund dated as of the effective date of the
N-14 Registration Statement in form and substance satisfactory to the Acquiring
Fund, to the effect that:
(a) they are independent public accountants with respect to the Fund
within the meaning of the 1933 Act and the applicable regulations thereunder;
and
(b) in their opinion, the financial statements and financial highlights of
the Fund included or incorporated by reference in the N-14 Registration
Statement and reported on by them comply as to form in all material aspects with
the applicable accounting requirements of the 1933 Act and the rules and
regulations thereunder.
7.6. The Acquiring Fund shall have received from PricewaterhouseCoopers
LLP a letter addressed to the Acquiring Fund dated as of the effective date of
the N-14 Registration Statement in form and substance satisfactory to the
Acquiring Fund, to the effect that:
(a) they are independent public accountants with respect to the Acquiring
Fund within the meaning of the 1933 Act and the applicable regulations
thereunder;
(b) in their opinion, the financial statements and financial highlights of
the Acquiring Fund included or incorporated by reference in the N-14
Registration Statement and reported on by them comply as to form in all material
aspects with the applicable accounting requirements of the 1933 Act and the
rules and regulations thereunder; and
(c) on the basis of limited procedures agreed upon by the Acquiring Fund
and the Trust and described in such letter (but not an examination in accordance
with generally accepted auditing standards), specified information relating to
such Fund appearing in the N-14 Registration Statement and the Proxy Statement
has been obtained from the accounting records of such Fund or from schedules
prepared by officers of such Fund having responsibility for financial and
reporting matters and such information is in agreement with such records,
schedules or computations made therefrom.
7.7. The Trust, on behalf of the Fund, shall have delivered to the
Acquiring Fund, pursuant to paragraph 4.1(f), copies of financial statements of
the Fund as of and for the fiscal year ended October 31, 2000.
7.8. The Acquiring Fund shall have received from PricewaterhouseCoopers
LLP a letter addressed to the Acquiring Fund and dated as of the Closing Date
stating that, as of a date no more than three (3) business days prior to the
Closing Date, PricewaterhouseCoopers LLP performed limited procedures and that
on the basis of those procedures it confirmed the matters set forth in paragraph
7.6.
7.9. The Board of Trustees of the Trust, including a majority of the
trustees who are not "interested persons" of the Trust (as defined by the 1940
Act), shall have determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Fund and that the interests
of the shareholders in the Fund would not be diluted as a result of such
transactions, and the Fund shall have delivered to the Acquiring Fund at the
Closing, a certificate, executed by an officer, to the effect that the condition
described in this subparagraph has been satisfied.
8. Further Conditions Precedent to Obligations of the Acquiring Fund and
the Fund
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquiring Fund, the Trust, on behalf of the
Fund, shall, and if any of such conditions do not exist on or before the Closing
Date with respect to the Fund, the Acquiring Fund shall, at their respective
option, not be required to consummate the transactions contemplated by this
Agreement.
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8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Fund in accordance with the provisions of the Trust Agreement and
Declaration of Trust and applicable law and certified copies of the votes
evidencing such approval shall have been delivered to the Acquiring Fund.
8.2. On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
"no-action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by the Acquiring Fund or the Fund to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Fund, provided that either party hereto
may for itself waive any of such conditions.
8.4. The N-14 Registration Statement and the Acquiring Fund Registration
Statement shall each have become or be effective under the 1933 Act and no stop
orders suspending the effectiveness thereof shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the 1933 Act.
8.5. The parties shall have received a favorable opinion of Willkie Farr &
Gallagher, addressed to, and in form and substance satisfactory to, the Fund and
the Acquiring Fund, substantially to the effect that for federal income tax
purposes:
(a) The transfer of all of the Fund's assets in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of the liabilities of the
Fund, and the distribution of such Acquiring Fund Shares to shareholders of the
Fund in exchange for their shares of the Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and the
Acquiring Fund and the Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code; (b) no gain or loss will be
recognized by the Acquiring Fund on the receipt of the assets of the Fund solely
in exchange for the Acquiring Fund Shares and the assumption by the Acquiring
Fund of the liabilities of the Fund; (c) no gain or loss will be recognized by
the Fund upon the transfer of the Fund's assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund
of the liabilities of the Fund or upon the distribution of the Acquiring Fund
Shares to the Fund's shareholders in exchange for their shares of the Fund; (d)
no gain or loss will be recognized by shareholders of the Fund upon the exchange
of their Fund shares for the Acquiring Fund Shares or upon the assumption by the
Acquiring Fund of the liabilities of the Fund; (e) the aggregate tax basis for
the Acquiring Fund Shares received by each of the Fund's shareholders pursuant
to the Reorganization will be the same as the aggregate tax basis of the Fund
Shares held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund Shares to be received by each Fund
shareholder will include the period during which the Fund Shares exchanged
therefor were held by such shareholder (provided that such Fund Shares were held
as capital assets on the date of the Reorganization); and (f) the tax basis of
the Fund's assets acquired by the Acquiring Fund will be the same as the tax
basis of such assets to the Fund immediately prior to the Reorganization, and
the holding period of the assets of the Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Trust may waive the conditions set forth in this paragraph 8.5.
9. Brokerage Fees and Expenses; Other Agreements
9.1. The Acquiring Fund represents and warrants to the Trust, and the
Trust, on behalf of the Fund, represents and warrants to the Acquiring Fund,
that there are no brokers or finders or other entities to receive any payments
in connection with the transactions provided for herein.
A-12
<PAGE>
9.2. CSAM or its affiliates agrees to bear the reasonable expenses
incurred in connection with the transactions contemplated by this Agreement,
whether or not consummated (excluding extraordinary expenses such as litigation
expenses, damages and other expenses not normally associated with transactions
of the type contemplated by this Agreement). These expenses consist of: (i)
expenses associated with preparing this Agreement, the N-14 Registration
Statement and expenses of the shareholder meetings; (ii) preparing and filing
the N-14 Registration Statement covering the Acquiring Fund Shares to be issued
in the Reorganization; (iii) registration or qualification fees and expenses of
preparing and filing such forms, if any, necessary under applicable state
securities laws to qualify the Acquiring Fund Shares to be issued in connection
with the Reorganization; (iv) postage; printing; accounting fees; and legal fees
incurred by the Acquiring Fund and by the Fund in connection with the
transactions contemplated by this Agreement; (v) solicitation costs incurred in
connection with the shareholders meeting referred to in clause (i) above and
paragraph 5.2 hereof and (vi) any other reasonable Reorganization expenses.
9.3. Any other provision of this Agreement to the contrary
notwithstanding, any liability of either Fund under this Agreement, or in
connection with the transactions contemplated herein with respect to such Fund,
shall be discharged only out of the assets of such Fund.
10. Entire Agreement; Survival of Warranties
10.1. The Acquiring Fund and the Trust agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement among the parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
11. Termination
11.1. This Agreement may be terminated at any time at or prior to the
Closing Date by: (1) mutual agreement of the Trust and the Acquiring Fund; (2)
the Trust in the event the Acquiring Fund shall, or the Acquiring Fund, in the
event the Fund shall, materially breach any representation, warranty or
agreement contained herein to be performed at or prior to the Closing Date; or
(3) the Trust or the Acquiring Fund in the event a condition herein expressed to
be precedent to the obligations of the terminating party or parties has not been
met and it reasonably appears that it will not or cannot be met within a
reasonable time.
11.2. In the event of any such termination, there shall be no liability
for damages on the part of either the Acquiring Fund, the Trust or the Fund, or
their respective Directors, Trustees or officers, to the other party or parties.
12. Amendments
This Agreement may be amended, modified or supplemented in writing in such
manner as may be mutually agreed upon by the authorized officers of the Trust
and the Acquiring Fund; provided, however, that following the meeting of the
Fund's shareholders called by the Trust pursuant to paragraph 5.2 of this
Agreement no such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the Fund's
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
13. Notices
13.1. Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Trust at:
A-13
<PAGE>
277 Park Avenue
New York, NY 10172
Attention: Martin Jaffe
with a copy to:
Earl D. Weiner, Esq.
Sullivan & Cromwell
125 Broad St.
New York, NY 10004
or to the Acquiring Fund at:
466 Lexington Avenue
New York, NY 10017
Attention: Hal Liebes, Esq.
with a copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
14. Headings; Counterparts; Governing Law; Assignment; Limitation of
Liability
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. Notice is hereby given that this Agreement is entered into on behalf
of the Trust by an officer of the Fund in such officer's capacity as an officer
and not individually. It is understood and expressly stipulated that none of the
Trustees, officers or shareholders of the Fund are personally liable hereunder.
A-14
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its Chairman of the Board, President or Vice President and
attested to by its Secretary or Assistant Secretary.
DLJ SELECT FUNDS,
For and on Behalf of its DLJ Strategic Growth Fund Series
By:_______________________________________________________
Name:
Title:
Attestation By:___________________________________________
Name:
Title:
WARBURG, PINCUS FOCUS FUND, INC.
By:_______________________________________________________
Name: Hal Liebes
Title: Secretary
Attestation By:___________________________________________
Name: Stuart Cohen
Title: Assistant Secretary
Solely with respect to paragraph 9.2:
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:_______________________________________________________
Name:
Title:
Attestation By:___________________________________________
Name: Hal Liebes
Title: Secretary
A-15
<PAGE>
ANNEX A
TO AGREEMENT AND PLAN OF REORGANIZATION
List of Additional Examined Agreements to which DLJ Select Funds is a Party
o Interim Investment Advisory Agreement, dated November 3, 2000.
o Services Agreement, dated ______.
o Subscription Agreement with initial shareholders, dated ____.
A-16
<PAGE>
EXHIBIT B
FORM OF INVESTMENT ADVISORY AGREEMENT
____________, 2001
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, New York 10017-3147
Dear Sirs:
The DLJ Select Funds, a Delaware business trust (the "Fund"), for
and on behalf of each of its series listed on Annex I hereto, which may be
amended from time to time, (each, a "Series" and, collectively, the "Series"),
herewith confirms its agreement with Credit Suisse Asset Management, LLC (the
"Adviser") as follows:
1. Investment Description; Appointment
The Fund, on behalf of each of the Series, desires to employ the
capital of such Series by investing and reinvesting in investments of the kind
and in accordance with the limitations specified in its Agreement and
Declaration of Trust, as may be amended from time to time, and in the Fund's
Prospectus(es) and Statement(s) of Additional Information, if any, as from time
to time in effect (the "Prospectus" and "SAI," respectively), and in such manner
and to such extent as may from time to time be approved by the Board of Trustees
of the Fund. Copies of the Fund's Prospectuses and SAIs have been or will be
submitted to the Adviser. The Fund desires to employ and hereby appoints the
Adviser to act as investment adviser to each of the Series. The Adviser accepts
the appointment and agrees to furnish the services for the compensation set
forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Trustees of
the Fund, the Adviser will (a) act in strict conformity with the Fund's
Agreement and Declaration of Trust, the Investment Company Act of 1940 (the
"1940 Act") and the Investment Advisers Act of 1940, as the same may from time
to time be amended, (b) manage such Series' assets in accordance with such
Series' investment objective and policies as stated in the Fund's Prospectuses
and SAIs, (c) make investment decisions for such Series, (d) place purchase and
sale orders for securities on behalf of such Series, (e) exercise voting rights
in respect of portfolio securities and other investments for such Series, and
(f) monitor and evaluate the services provided by such Series' investment
sub-adviser(s), if any, under the terms of the applicable investment
sub-advisory agreement(s). In providing those services, the Adviser will provide
investment research and supervision of such Series' investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of such Series' assets. In addition, the Adviser will furnish each
Series with whatever statistical information such Series or Fund may reasonably
request with respect to the securities that such Series may hold or contemplate
purchasing.
Subject to the approval of the Board of Trustees of each of the Fund
and where required, the Fund's shareholders, the Adviser may engage an
investment sub-adviser or sub-advisers to provide advisory services in respect
of such Series and may delegate to such investment sub-adviser(s) the
responsibilities described in subparagraphs (b), (c), (d) and (e) above. In the
event that an investment sub-adviser's engagement has been terminated, the
Adviser shall be responsible for furnishing such Series with the services
required to be performed by such investment sub-adviser(s) under the applicable
investment sub-advisory agreements or arranging for a successor investment
sub-adviser(s) to provide such services on terms and conditions acceptable to
such Series and the Fund's Board of Trustees and subject to the requirements of
the 1940 Act.
B-1
<PAGE>
3. Brokerage
In executing transactions for each Series, selecting brokers or
dealers and negotiating any brokerage commission rates, the Adviser will use its
best efforts to seek the best overall terms available. In assessing the best
overall terms available for any portfolio transaction, the Adviser will consider
all factors it deems relevant including, but not limited to, breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and for transactions executed through
the broker or dealer in the aggregate. In selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, the Adviser may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as the same may from time to time be amended) provided to each Series and/or
other accounts over which the Adviser or an affiliate exercises investment
discretion.
4. Information Provided to the Fund
The Adviser will keep each Series informed of developments
materially affecting such Series, and will, on its own initiative, furnish such
Series from time to time with whatever information the Adviser believes is
appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3 and 4 above. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by any
Series in connection with the matters to which this Agreement relates, provided
that nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to each Series or to shareholders of such Series to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this
Agreement, each Series will pay the Adviser the annual fee applicable to such
Series calculated at an annual rate set forth on Annex I hereto of such Series'
average daily net assets.
The fee for the period from the date of this Agreement to the end of
the year shall be prorated according to the proportion that such period bears to
the full yearly period. Upon any termination of this Agreement before the end of
a year, the fee for such part of that year shall be prorated according to the
proportion that such period bears to the full yearly period and shall be payable
upon the date of termination of this Agreement. For the purpose of determining
fees payable to the Adviser, the value of each Series' net assets shall be
computed at the times and in the manner specified in such Fund's Prospectus(es)
or SAI(s).
The fee shall be calculated and payable monthly.
7. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement, including the fees payable to
any investment sub-adviser engaged pursuant to paragraph 2 of this Agreement.
Each Series will bear its proportionate share of certain other expenses to be
incurred in its operation, including: investment advisory and administration
fees; taxes, interest, brokerage fees and commissions, if any; fees of Trustees
of such Series who are not officers, directors, or employees of the Adviser, any
sub-adviser or any of their affiliates; fees of any pricing service employed to
value shares of the Series; Securities and Exchange Commission fees and state
blue sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; such Series' proportionate share of insurance premiums;
outside auditing and legal expenses; costs of maintenance of such Series' or the
Fund's existence; costs attributable to investor services, including, without
B-2
<PAGE>
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of such Series and of the officers or Board of
Trustees of the Fund; and any extraordinary expenses.
Each Series will be responsible for nonrecurring expenses which may
arise, including costs of litigation to which such Series is a party and of
indemnifying officers and Trustees of the Fund with respect to such litigation
and other expenses as determined by the Trustees.
8. Services to Other Companies or Accounts
The Fund and Series understand that the Adviser now acts, will
continue to act and may act in the future as investment adviser to fiduciary and
other managed accounts and to one or more other investment companies or series
of investment companies, and such Series or Fund has no objection to the Adviser
so acting, provided that whenever such Series or Fund and one or more other
accounts or investment companies or portfolios advised by the Adviser have
available funds for investment, investments suitable and appropriate for each
will be allocated in accordance with a formula believed to be equitable to each
entity. Each Series and Fund recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for such Series or Fund. In
addition, each Series and Fund understands that the persons employed by the
Adviser to assist in the performance of the Adviser's duties hereunder will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature, provided that doing so does not
adversely affect the ability of the Adviser to perform its services under this
Agreement.
9. Term of Agreement
This Agreement shall continue for an initial two-year period
commencing on the date first written above, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (a) (i) in the case of a Series, the
Board of Trustees of the Fund of which such Series is a part or (ii) in the case
of the High Yield Bond Fund, the Board of Trustees of the Fund or (b) a vote of
a "majority" (as defined in the 1940 Act) of each Series' and Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees of the applicable Fund, who are
not "interested persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable with respect to a Series or Fund,
without penalty, on 60 days' written notice, by the Board of Trustees of such
Series and Fund or by vote of holders of a majority of such Series' or Fund's
shares, or upon 90 days' written notice, by the Adviser. This Agreement will
also terminate automatically in the event of its assignment (as defined in said
Act).
10. Representation by the Fund
The Funds represent that copies of their Agreements and Declarations
of Trust, together with all amendments thereto, are on file in such state where
such Fund is registered.
11. Use of Names
The Funds recognize that directors, officers and employees of the
Adviser may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"Warburg", "Warburg Pincus", "DLJ", "CS", "CSAM", "Credit Suisse" or "Credit
Suisse Warburg Pincus" as part of their names, and that the Adviser or its
affiliates may enter into advisory or other agreements with such other
corporations and trusts. If the Adviser ceases to act as the investment adviser
of a Series or Fund, such Series or Fund agrees that, at the Adviser's request,
such Series' or Fund's license to use the words "Warburg", "Warburg Pincus",
"DLJ", "CS", "CSAM", "Credit Suisse" or "Credit Suisse Warburg Pincus" will
terminate and that such Series or Fund will take all necessary action to change
the name of such Series or Fund to names not including the words "Warburg",
"Warburg Pincus", "DLJ", "CS", "CSAM", "Credit Suisse" or "Credit Suisse Warburg
Pincus".
B-3
<PAGE>
12. Miscellaneous
Notice is hereby given that this Agreement is entered into on behalf
of a Fund by an officer of such Fund in his capacity as an officer and not
individually. It is understood and expressly stipulated that none of the
Trustees or shareholders of any Fund shall be personally liable hereunder.
Neither the Trustees, officers, agents nor shareholders of any Fund assume any
personal liability for obligations entered into on behalf of a Fund. All persons
dealing with a Fund must look solely to the property of such Fund for the
enforcement of any claims against such Fund.
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
DLJ SELECT FUNDS
By:_____________________________________
Name:
Title:
Accepted:
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:________________________________
Name:
Title:
B-4
<PAGE>
ANNEX I
TO INVESTMENT ADVISORY AGREEMENT
<TABLE>
<CAPTION>
--------------------------------------------------- --------------------------------------------------------
Annual Fee Rate
(as a percentage of average daily net assets of such
Series Series)
--------------------------------------------------- --------------------------------------------------------
<S> <C>
DLJ Strategic Growth Fund (a series of the DLJ .75 of 1% of the first $500,000,000; .625 of 1% of the
Select Funds) balance
--------------------------------------------------- --------------------------------------------------------
</TABLE>
B-5
<PAGE>
EXHIBIT C
CERTAIN INFORMATION ABOUT CSAM AND CREDIT SUISSE GROUP
General
CSAM is an indirect wholly-owned U.S. subsidiary of Credit Suisse.
Credit Suisse is a global financial services company, providing a comprehensive
range of banking and insurance products. Active on every continent and in all
major financial centers, Credit Suisse comprises five business units -- Credit
Suisse Asset Management (asset management), of which CSAM is a member; Credit
Suisse First Boston (investment banking); Credit Suisse Private Banking (private
banking); Credit Suisse (retail banking); and Winterthur (insurance). Credit
Suisse has approximately $680 billion of global assets under management and
employs approximately 62,000 people worldwide. The principal business address of
Credit Suisse is Paradeplatz 8, CH 8070, Zurich, Switzerland. Credit Suisse
Asset Management companies managed approximately $68 billion in the U.S. and
$198 billion globally as of September 30, 2000.
CSAM's sole member is CSAM Americas Holding Corp. located at 466
Lexington Avenue, New York, New York New York, NY 10017, which is wholly-owned
by Credit Suisse Asset Management Holding Corp., of the same address, which in
turn is wholly-owned by Credit Suisse First Boston, Inc., located at 11 Madison
Avenue, New York, NY 10010, which is indirectly wholly-owned by Credit Suisse
Group.
Executive Officers of CSAM
The following chart sets forth information with respect to name,
address and principal occupations of the executive officer(s) and managing
member(s) of CSAM. (Unless otherwise noted, the person's position at CSAM
constitutes his/her principal occupation.) Each person's address is 466
Lexington Avenue, New York, New York 10017, except for Messrs. Cochran and
Jaffe, whose address is 277 Park Avenue, New York, New York 10172.
<TABLE>
<CAPTION>
----------------------------- ---------------------------------------------------------------------------
Name Position with CSAM and Principal Occupation
----------------------------- ---------------------------------------------------------------------------
<S> <C>
James P. McCaughan Chief Executive Officer, Managing Director and Chairman of the Management
Committee
----------------------------- ---------------------------------------------------------------------------
G. Moffett Cochran President, Managing Director and Member of the Management Committee
----------------------------- ---------------------------------------------------------------------------
Martin Jaffe Chief Financial Officer, Managing Director and Member of the Management
Committee
----------------------------- ---------------------------------------------------------------------------
Laurence R. Smith Chief Investment Officer, Managing Director and Member of the Management
Committee
----------------------------- ---------------------------------------------------------------------------
Elizabeth B. Dater Head of Emerging Growth Group, Managing Director and Member of the
Management Committee
----------------------------- ---------------------------------------------------------------------------
Christopher F. Corapi Head of Equity Research, Managing Director and Member of the Management
Committee
----------------------------- ---------------------------------------------------------------------------
Sheila Scott Managing Director and Member of the Management Committee
----------------------------- ---------------------------------------------------------------------------
</TABLE>
C-1
<PAGE>
Similar Funds Managed by CSAM
The following chart sets forth information with respect to other mutual
funds advised by CSAM with an investment objective similar to the investment
objective of the Fund.
-------------------------------------------------------------------------------
Similar Fund Net Assets as of Contractual Fee Waiver
Currently Managed by CSAM 10/31/00 Advisory Fee%
-------------------------------------------------------------------------------
Open-End Funds
-------------------------------------------------------------------------------
Warburg Pincus Focus Fund 14,906,323.30 0.75 Yes
-------------------------------------------------------------------------------
Brokerage Policies
CSAM is responsible for establishing, reviewing and, where
necessary, modifying the Fund's investment program to achieve its investment
objective. Purchases and sales of newly issued portfolio securities are usually
principal transactions without brokerage commissions effected directly with the
issuer or with an underwriter acting as principal. Other purchases and sales may
be effected on a securities exchange or over-the-counter, depending on where it
appears that the best price or execution will be obtained. The purchase price
paid by the Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. Government Securities are generally purchased from
underwriters or dealers, although certain newly issued U.S. Government
Securities may be purchased directly from the U.S. Treasury or from the issuing
agency or instrumentality. No brokerage commissions are typically paid on
purchases and sales of U.S. Government Securities.
In selecting broker-dealers, the Adviser does business exclusively
with those broker-dealers that, in the Adviser's judgment, can be expected to
provide the best service. The service has two main aspects: the execution of buy
and sell orders and the provision of research. In negotiating commissions with
broker-dealers, the Adviser will pay no more for execution and research services
than it considers either, or both together, to be worth. The worth of execution
service depends on the ability of the broker-dealer to minimize costs of
securities purchased and to maximize prices obtained for securities sold. The
worth of research depends on its usefulness in optimizing portfolio composition
and its changes over time. Commissions for the combination of execution and
research services that meet the Adviser's standards may be higher than for
execution services alone or for services that fall below the Adviser's
standards. The Adviser believes that these arrangements may benefit all clients
and not necessarily only the accounts in which the particular investment
transactions occur that are so executed. Further, the Adviser will only receive
brokerage or research service in connection with securities transactions that
are consistent with the "safe harbor" provisions of Section 28(e) of the
Securities Exchange Act of 1934 when paying such higher commissions. Research
services may include research on specific industries or companies, macroeconomic
analyses, analyses of national and international events and trends, evaluations
of thinly traded securities, computerized trading screening techniques and
securities ranking services, and general research services.
C-2
<PAGE>
Investment decisions for the Fund concerning specific portfolio
securities are made independently from those for other clients advised by the
Adviser. Such other investment clients may invest in the same securities as the
Fund. When purchases or sales of the same security are made at substantially the
same time on behalf of such other clients, transactions are averaged as to price
and available investments allocated as to amount, in a manner which the Adviser
believes to be equitable to each client, including the Fund. In some instances,
this investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold for the Fund. To the extent
permitted by law, securities may be aggregated with those to be sold or
purchased for the Fund with those to be sold or purchased for such other
investment clients in order to obtain best execution.
All orders for transactions in securities or options on behalf of a
Fund are placed by the Adviser with broker-dealers that it selects, including
CSFB, CSAMSI and affiliates of Credit Suisse. A Fund may utilize CSFB, CSAMSI or
affiliates of Credit Suisse in connection with a purchase or sale of securities
when the Adviser believes that the charge for the transaction does not exceed
usual and customary levels and when doing so is consistent with guidelines
adopted by the Board.
In no instance will portfolio securities be purchased from or sold
to CSAM, CSAMSI or Credit Suisse First Boston ("CS First Boston") or any
affiliated person of the foregoing entities except as permitted by SEC exemptive
order or by applicable law. In addition, the Fund will not give preference to
any institutions with whom the Fund enters into distribution or shareholder
servicing agreements concerning the provision of distribution services or
support services.
Transactions for the Fund may be effected on foreign securities
exchanges. In transactions for securities not actively traded on a foreign
securities exchange, the Fund will deal directly with the dealers who make a
market in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve brokerage commissions. Securities firms
may receive brokerage commissions on certain portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon exercise of options.
The Fund may participate, if and when practicable, in bidding for
the purchase of securities for the Fund's portfolio directly from an issuer in
order to take advantage of the lower purchase price available to members of such
a group. The Fund will engage in this practice, however, only when the Adviser,
in its sole discretion, believes such practice to be otherwise in the Fund's
interest.
C-3
<PAGE>
PROXY
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
DLJ MUTUAL FUNDS
DLJ Strategic Growth Fund
VOTE THIS CARD TODAY
BY MAIL, BY FAX AT 1-212-_________, BY PHONE AT 1-800-_________
OR ON-LINE AT _________
CONTROL NUMBER:
<TABLE>
<S> <C>
Please be sure to sign and date this Proxy. Date____________________
Shareholder sign here_______________________ Co-owner sign here ______________________
1. To approve the Agreement and Plan of Reorganization (the "Plan") For Against Abstain
providing that (i) the Fund would transfer to Warburg, Pincus |_| |_| |_|
Focus Fund, Inc. (the "Acquiring Fund") all of its assets in
exchange for shares of the Acquiring Fund and the assumption by
the Acquiring Fund of the Fund's liabilities, (ii) such shares
of the Acquiring Fund would be distributed to shareholders of
the Fund in liquidation of the Fund, and (iii) the Fund would
subsequently be terminated.
2. To approve a new investment advisory agreement for the Fund. For Against Abstain
|_| |_| |_|
3. To elect eight Trustees to the Board of Trustees of DLJ Select For All Withhold For All
Funds. Nominees Except
|_| |_| |_|
(01) Richard H. Francis (05) James S. Pasman
(02) Jack W. Fritz (06) William W. Priest
(03) Jeffrey E. Garten (07) James P. McCaughan
(04) Peter F. Krogh (08) Steven N. Rappaport
</TABLE>
Instruction: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
The proxies are authorized to vote upon such other business as may properly come
before the Meeting or any adjournment or adjournments thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card.
RECORD DATE SHARES:
<PAGE>
DLJ STRATEGIC GROWTH FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
SPECIAL MEETING OF SHAREHOLDERS - March 23, 2001
The undersigned hereby appoints Brian Kammerer and Jill Kopin, each with
the power of substitution, as proxies for the undersigned to vote all shares of
the DLJ Strategic Growth Fund which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Fund to be held at the offices of the
Fund, 277 Park Avenue, New York, New York 10172, on March 23, 2001 at 10:00
a.m., Eastern time, and at any adjournments thereof.
UNLESS OTHERWISE SPECIFIED IN THE BOXES PROVIDED, THE UNDERSIGNED'S VOTE
WILL BE CAST FOR EACH ITEM LISTED ON THE REVERSE SIDE. A PROPERLY EXECUTED PROXY
IN WHICH NO SPECIFICATION IS MADE WILL BE VOTED IN FAVOR OF THE PROPOSAL.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
NOTE: Please sign exactly as name(s) appear(s) hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
____________________________________ _______________________________________
____________________________________ _______________________________________
____________________________________ _______________________________________
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
PROSPECTUSES OF THE ACQUIRING FUND ARE
INCORPORATED BY REFERENCE TO ITS
N-1A REGISTRATION STATEMENT
PART B
STATEMENT OF ADDITIONAL INFORMATION DATED __________, 2001
Acquisition of the Assets of
DLJ STRATEGIC GROWTH FUND
277 Park Avenue
New York, New York 10172
(800) 225-8011
By and in Exchange for Shares of
WARBURG, PINCUS FOCUS FUND, INC.
466 Lexington Avenue
New York, New York 10017
800-WARBURG
This Statement of Additional Information, relating specifically to the
proposed transfer of all of the assets of the DLJ Strategic Growth Fund (the
"Fund") to Warburg, Pincus Focus Fund, Inc. (the "Acquiring Fund") in exchange
for shares of the Acquiring Fund and the assumption by the Acquiring Fund of
liabilities of the Fund (the "Acquisition"), consists of this cover page and the
following described documents, each of which accompanies this Statement of
Additional Information and is incorporated herein by reference.
1. Statement of Additional Information for the Acquiring Fund, dated
February 29, 2001.
2. Annual Reports of the Acquiring Fund and the Fund for the fiscal
year ended August 31, 2000 and October 31, 2000, respectively.
This Statement of Additional Information is not a prospectus. Extra copies
of the Prospectus/Proxy Statement, dated _________, 2001, relating to the
above-referenced matter may be obtained without charge by calling or writing the
Acquiring Fund at the telephone number or address set forth above. This
Statement of Additional Information should be read in conjunction with the
Prospectus/Proxy Statement.
FINANCIAL STATEMENTS
The Annual Reports of the Acquiring Fund and the Fund, for the fiscal year
ended August 31, 2000 and October 31, 2000, respectively, and each including
audited financial statements, notes to the financial statements and report of
the independent auditors, are incorporated by reference herein. To obtain a copy
of the Annual Reports without charge, please call (800) 225-8011.
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The following tables set forth the unaudited pro forma condensed Statement
of Assets and Liabilities and Schedule of Investments as of October 31, 2000 for
the Fund, and as of August 31, 2001 for the Acquiring Fund, and the unaudited
pro forma condensed Statement of Operations for the fiscal year ended October
31, 2000 for the Fund and August 31, 2000 for the Acquiring Fund, as adjusted,
giving effect to the Acquisition.
<PAGE>
PRO FORMA CONDENSED STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
<TABLE>
<CAPTION>
DLJ Strategic Growth Warburg Pincus Focus
October 31, 2000 August 31, 2000 Adjustments
Cost Value Cost Value
---- ----- ---- -----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value $ 8,459,866 $ 8,774,545 $14,314,278 $13,241,059
Receivable for fund shares sold -- -- -- 220,412
Cash -- 679 -- 14,183
Receivable for investment sold unsettled -- -- -- 145,793
Dividends and interest receivable -- 2,319 -- 16,220
Prepaid expenses and other assets -- -- -- 31,728
Receivable from advisor -- 7,768 -- 2,050
----------- -----------
Total Assets $ 8,785,484 $13,671,445
----------- -----------
LIABILITIES
Payable for investments purchased
unsettled -- -- -- $ 226,283
Distribution fee payable -- $ 2,059 -- 526
Accrued expenses payable -- 23,939 -- 28,990
----------- -----------
Total Liabilities $ 25,998 $ 255,799
----------- -----------
NET ASSETS $ 8,759,486 $13,415,646
=========== ===========
Common Class
Net Assets -- 2,757,676 8,759,486
Shares outstanding -- 144,126 457,802
Net asset value, offering price and redemption
price per share -- 19.13
Institutional Class
Net Assets -- 10,657,970 --
Shares outstanding -- 553,587 --
Net asset value, offering price and redemption
price per share -- 19.25
Class A Shares
Net Assets 99,478 -- (99,478)
Shares outstanding 9,097 -- (9,097)
Net asset value, offering price and redemption
price per share 10.93 --
Maximum offering price per share (net asset
value plus maximum sales charge) 11.60 --
Class B Shares
Net Assets 359,117 -- (359,117)
Shares outstanding 32,864 -- (32,864)
Net asset value, offering price and redemption
price per share 10.93 --
Class C Shares
Net Assets 38,306 -- (38,306)
Shares outstanding 3,504 -- (3,504)
Net asset value, offering price and redemption
price per share 10.93 --
Class R Shares
Net Assets 8,262,585 -- (8,262,585)
Shares outstanding 755,256 -- (755,256)
Net asset value, offering price and redemption
price per share 10.94 --
<CAPTION>
Pro Forma
Cost Value
---- -----
<S> <C> <C>
ASSETS
Investments at value $22,774,144 $22,015,604
Receivable for fund shares sold -- 220,412
Cash -- 14,862
Receivable for investment sold unsettled -- 145,793
Dividends and interest receivable -- 18,539
Prepaid expenses and other assets -- 31,728
Receivable from advisor -- 9,818
-----------
Total Assets $22,456,929
-----------
LIABILITIES
Payable for investments purchased
unsettled -- $ 226,283
Distribution fee payable -- 2,585
Accrued expenses payable -- 52,929
-----------
Total Liabilities $ 281,788
-----------
NET ASSETS $22,175,132
===========
Common Class
Net Assets 11,517,162
Shares outstanding 601,928
Net asset value, offering price and redemption
price per share 19.13
Institutional Class
Net Assets 10,657,970
Shares outstanding 553,587
Net asset value, offering price and redemption
price per share 19.25
Class A Shares
Net Assets --
Shares outstanding --
Net asset value, offering price and redemption
price per share --
Maximum offering price per share (net asset
value plus maximum sales charge) --
Class B Shares
Net Assets --
Shares outstanding --
Net asset value, offering price and redemption
price per share --
Class C Shares
Net Assets --
Shares outstanding --
Net asset value, offering price and redemption
price per share --
Class R Shares
Net Assets --
Shares outstanding --
Net asset value, offering price and redemption
price per share --
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
DLJ Strategic Growth Fund and Warburg Pincus Focus Fund
Combined Statement of Investments (unaudited)
<TABLE>
<CAPTION>
DLJ Strategic Growth (October 31, 2000)
Security Name Shares/ Market Value
------------- ------- ------------
Principal
---------
<S> <C> <C>
AMERICA ONLINE, INC.* 3,150 158,854
AMERICAN HOME PRODUCTS CORP. 3,300 209,550
AMGEN, INC.* 3,075 178,158
ANALOG DEVICES, INC.* 1,700 110,500
APPLIED MATERIALS, INC.* 1,933 102,691
BMC SOFTWARE, INC.* 1,525 30,977
CIENA CORP.* 1,480 155,585
CISCO SYSTEMS, INC.* 5,950 320,556
CITIGROUP, INC. 1,766 92,936
COLGATE-PALMOLIVE CO. 2,200 129,272
COMPUTER ASSOCIATES INTERNATIONANAL, 1,800 57,375
INC.
CORNING, INC.* 2,100 160,650
COSTCO WHOLESALE CORP.* 1,975 72,334
EMC CORP.* 3,450 307,266
EXODUS COMMUNICATIONS, INC.* 1,600 53,700
FLEXTRONICS INTERNATIONAL LTD* 2,350 89,300
GENERAL ELECTRIC CO. 7,600 416,575
GENERAL MILLS, INC. 2,575 107,506
HOME DEPOT, INC. 3,275 140,825
INTEL CORP. 6,000 270,000
JOHNSON & JOHNSON 2,400 221,100
LEHMAN BROTHERS HOLDINGS, INC. 2,000 129,000
LINEAR TECHNOLOGY CORP. 1,700 109,756
MCI WORLDCOM, INC.* 3,000 71,250
MEDTRONIC, INC. 3,125 169,726
MERCK & CO., INC. 3,700 332,769
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
DLJ Strategic Growth Fund and Warburg Pincus Focus Fund
Combined Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Warburg Pincus Focus (August 31, 2000)
Security Name Shares Market Value
------------- ------ ------------
<S> <C> <C>
AMERICA ONLINE, INC.* 6,800 398,650
ARCHER-DANIELS MIDLAND CO. 41,265 363,648
ATMEL CORPORATION* 8,000 160,000
BBH GRAND CAYMAN 240,569 240,569
BOEING CO 8,700 466,538
BURLINGTON RESOURCES, INC. 3,300 129,731
CARDINAL HEALTH, INC. 2,500 204,531
CISCO SYSTEMS* 8,100 555,863
COCA-COLA CO. 8,400 442,050
COMPAQ COMPUTER CORP. 8,600 292,938
COSTCO WHOLESALE CORP* 4,000 137,750
E.I. DU PONT DE NEMOURS AND CO 7,700 345,538
ELI LILLY AND COMPANY 4,500 328,500
EMC CORP.* 1,400 137,200
FORD MOTOR COMPANY 12,237 295,982
FREDDIE MAC 5,000 210,625
GENERAL ELECTRIC CO. 6,000 352,125
GILEAD SCIENCES INC.* 1,400 151,200
GUIDANT CORPORATION* 6,200 417,338
I2 TECHNOLOGIES, INC.* 2,700 456,806
IMC GLOBAL, INC. 7,000 102,813
INKTOMI CORP* 2,300 299,863
JDS UNIPHASE CORP* 1,800 224,072
LOCKHEED MARTIN CORP. 18,200 516,425
LUCENT TECHNOLOGIES, INC. 11,100 464,119
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
DLJ Strategic Growth Fund and Warburg Pincus Focus Fund
Combined Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Pro-Forma Fund
Security Name Shares Market
------------- ------ ------
Value
-----
<S> <C> <C>
AMERICA ONLINE, INC.* 9,950 557,504
AMERICAN HOME PRODUCTS CORP. 3,300 209,550
AMGEN, INC.* 3,075 178,158
ARCHER-DANIELS MIDLAND CO. 41,265 363,648
ATMEL CORPORATION* 8,000 160,000
ANALOG DEVICES, INC.* 1,700 110,500
APPLIED MATERIALS, INC.* 1,933 102,691
BBH GRAND CAYMAN 240,569 240,569
BMC SOFTWARE, INC.* 1,525 30,977
BOEING CO 8,700 466,538
BURLINGTON RESOURCES, INC. 3,300 129,731
CARDINAL HEALTH, INC. 2,500 204,531
CIENA CORP.* 1,480 155,585
CISCO SYSTEMS, INC.* 14,050 876,419
CITIGROUP, INC. 1,766 92,936
COCA-COLA CO. 8,400 442,050
COLGATE-PALMOLIVE CO. 2,200 129,272
COMPAQ COMPUTER CORP. 8,600 292,938
COMPUTER ASSOCIATES 1,800 57,375
INTERNATIONANAL, INC.
CORNING, INC.* 2,100 160,650
COSTCO WHOLESALE CORP.* 5,975 210,084
E.I. DU PONT DE NEMOURS AND CO 7,700 345,538
ELI LILLY AND COMPANY 4,500 328,500
EMC CORP.* 4,850 444,466
EXODUS COMMUNICATIONS, INC.* 1,600 53,700
FLEXTRONICS INTERNATIONAL LTD* 2,350 89,300
FORD MOTOR COMPANY 12,237 295,982
FREDDIE MAC 5,000 210,625
GENERAL ELECTRIC CO. 13,600 768,700
GENERAL MILLS, INC. 2,575 107,506
GILEAD SCIENCES INC.* 1,400 151,200
GUIDANT CORPORATION* 6,200 417,338
HOME DEPOT, INC. 3,275 140,825
I2 TECHNOLOGIES, INC.* 2,700 456,806
IMC GLOBAL, INC. 7,000 102,813
INKTOMI CORP* 2,300 299,863
INTEL CORP. 6,000 270,000
JDS UNIPHASE CORP* 1,800 224,072
JOHNSON & JOHNSON 2,400 221,100
LEHMAN BROTHERS HOLDINGS, INC. 2,000 129,000
LINEAR TECHNOLOGY CORP. 1,700 109,756
LOCKHEED MARTIN CORP. 18,200 516,425
LUCENT TECHNOLOGIES, INC. 11,100 464,119
MCI WORLDCOM, INC.* 3,000 71,250
MEDTRONIC, INC. 3,125 169,726
MERCK & CO., INC. 3,700 332,769
</TABLE>
<PAGE>
DLJ Strategic Growth Fund and Warburg Pincus Focus Fund
Combined Statement of Investments (unaudited)
<TABLE>
<CAPTION>
DLJ Strategic Growth (October 31, 2000)
Security Name Shares/ Market Value
------------- ------- ------------
Principal
---------
<S> <C> <C>
MICROSOFT CORP.* 4,675 321,991
MILLENNIUM PHARMACEUTICALS, INC.* 2,300 166,894
NATIONAL AUSTRALIA FUNDING 6.581%, 167,000 167,000
11/01/00**
NETWORK APPLIANCE, INC.* 1,750 208,250
NEXTEL COMMUNICATIONS, INC.* 1,800 69,187
NORTEL NETWORKS CORP. 3,550 161,525
OMNICOM GROUP, INC. 2,075 191,419
ORACLE CORP.* 7,500 247,500
PFIZER, INC. 5,100 220,256
PHARMACIA CORP. 3,167 174,185
PROCTER & GAMBLE CO. 2,025 144,661
PROVIDIAN FINANCIAL CORP. 1,000 104,000
SCHERING-PLOUGH CORP. 3,900 201,581
SCI SYSTEMS, INC.* 1,775 76,325
SCIENTIFIC-ATLANTA, INC.* 2,825 193,336
SIEBEL SYSTEMS, INC.* 2,000 209,875
SOLECTRON CORP.* 2,650 116,600
SPRINT CORP. (FON GROUP) 1,775 45,263
SUN MICROSYSTEMS, INC.* 2,550 282,731
TELLABS, INC.* 1,425 71,161
TEXAS INSTRUMENTS, INC. 3,900 191,344
TIME WARNER, INC. 2,275 172,695
TYCO INTERNATIONAL LTD. 3,350 189,903
VERITAS SOFTWARE CORP.* 1,725 243,252
WAL-MART STORES, INC. 4,325 196,247
XO COMMUNICATIONS, INC.* 6,200 209,153
---------
8,774,545
=========
</TABLE>
<PAGE>
DLJ Strategic Growth Fund and Warburg Pincus Focus Fund
Combined Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Warburg Pincus Focus (August 31, 2000)
Security Name Shares Market Value
------------- ------ ------------
<S> <C> <C>
MICROSOFT CORP* 7,400 516,613
MOTOROLA,INC. 2,500 90,156
MYLAN LABORATORIES INC. 10,200 270,938
NABISCO GROUP HOLDINGS CORP. 12,300 345,169
PFIZER INC 8,900 384,925
PHARMACIA CORP. 8,800 515,350
PHILIP MORRIS COS,INC. 16,400 485,850
S & P DEPOSITORY RECEIPT 2,600 396,094
SBC COMMUNICATIONS INC. 12,900 538,575
SIEBEL SYSTEMS, INC.* 1,500 296,719
TEXACO INC 7,000 360,500
UNILEVER N.V. 8,000 378,000
WAL MART STORES INC 3,700 175,519
WATSON PHARMACEUTICALS 2,800 172,724
WORLDCOM, INC.* 8,600 313,900
WRIGLEY WM JR CO 3,300 244,407
YAHOO! INC.* 500 60,750
----------
13,241,063
==========
</TABLE>
<PAGE>
DLJ Strategic Growth Fund and Warburg Pincus Focus Fund
Combined Statement of Investments (unaudited)
<TABLE>
<CAPTION>
Pro-Forma Fund
Security Name Shares Market
-------------- ------ ------
Value
-----
<S> <C> <C>
MICROSOFT CORP.* 12,075 838,604
MILLENNIUM PHARMACEUTICALS, INC.* 2,300 166,894
MOTOROLA,INC. 2,500 90,156
MYLAN LABORATORIES INC. 10,200 270,938
NABISCO GROUP HOLDINGS CORP. 12,300 345,169
NATIONAL AUSTRALIA FUNDING 167,000 167,000
6.581%, 11/01/00**
NETWORK APPLIANCE, INC.* 1,750 208,250
NEXTEL COMMUNICATIONS, INC.* 1,800 69,187
NORTEL NETWORKS CORP. 3,550 161,525
OMNICOM GROUP, INC. 2,075 191,419
ORACLE CORP.* 7,500 247,500
PFIZER, INC. 14,000 605,181
PHARMACIA CORP. 11,967 689,535
PHILIP MORRIS COS,INC. 16,400 485,850
PROCTER & GAMBLE CO. 2,025 144,661
PROVIDIAN FINANCIAL CORP. 1,000 104,000
S & P DEPOSITORY RECEIPT 2,600 396,094
SBC COMMUNICATIONS INC. 12,900 538,575
SCHERING-PLOUGH CORP. 3,900 201,581
SCI SYSTEMS, INC.* 1,775 76,325
SCIENTIFIC-ATLANTA, INC.* 2,825 193,336
SIEBEL SYSTEMS, INC.* 3,500 506,594
SOLECTRON CORP.* 2,650 116,600
SPRINT CORP. (FON GROUP) 1,775 45,263
SUN MICROSYSTEMS, INC.* 2,550 282,731
TELLABS, INC.* 1,425 71,161
TEXACO INC 7,000 360,500
TEXAS INSTRUMENTS, INC. 3,900 191,344
TIME WARNER, INC. 2,275 172,695
TYCO INTERNATIONAL LTD. 3,350 189,903
UNILEVER N.V. 8,000 378,000
VERITAS SOFTWARE CORP.* 1,725 243,252
WAL-MART STORES, INC. 8,025 371,766
WATSON PHARMACEUTICALS 2,800 172,725
WORLDCOM, INC.* 8,600 313,900
WRIGLEY WM JR CO 3,300 244,406
XO COMMUNICATIONS, INC.* 6,200 209,153
YAHOO! INC.* 500 60,750
----------
22,015,605
==========
</TABLE>
* NON-INCOME PRODUCING SECURITIES
(#) As of August 31, 2000, fiscal year-end
** Commercial paper is traded on a discount basis; the interest rate shown
reflects the discount rate paid at the time of purchase by the Fund.
See Notes to Pro Forma Financial Statements
<PAGE>
Combined Statement of Operations
For the 12 months ended in 2000 (unaudited)
<TABLE>
<CAPTION>
DLJ Strategic Warburg Pincus
Growth October 31 Focus August 31 Adjustments Pro Forma
<S> <C> <C> <C> <C>
Investment Income
Dividends 28,639 148,039 -- 176,678
Interest 17,849 21,203 -- 39,052
Securities Lending -- 1,590 -- 1,590
Foreign Taxes -- (1,728) -- (1,728)
-------- ---------- -------- ----------
Total Investment Income 46,488 169,104 -- 215,592
-------- ---------- -------- ----------
Expenses
Investment advisory services 47,380 104,634 -- 152,014
Distribution fees - Class A 24 -- (24)(a) --
Distribution fees - Class B 550 -- (550)(b) --
Distribution fees - Class C 57 -- (57)(b) --
Distribution fees - Class R 15,618 -- (15,618)(a) --
Distribution fees - Common Class -- 2,919 15,796(a,b) 18,715
Transfer agent 18,000 24,114 (2,256)(c) 39,858
Custodian 44,000 59,188 (5,355)(d) 97,833
Administrative and accounting fees -- 17,170 6,679(e) 23,849
Administrative services fees -- 584 6,679(f) 7,263
Registration fees 35,000 39,002 (35,000)(g) 39,002
Interest -- 1,257 -- 1,257
Legal 5,500 10,348 (5,500)(g) 10,348
Directors'/Trustees' fees 2,000 9,965 (2,000)(g) 9,965
Audit 9,000 15,948 (9,000)(g) 15,948
Printing 6,000 37,667 (6,000)(g) 37,667
Insurance expense -- 712 -- 712
Miscellaneous 2,136 1,145 -- 3,281
Shareholder servicing fees 8,850 -- -- 8,850
-------- ---------- -------- ----------
194,115 324,653 (52,206) 466,562
Less: Expenses waived and reimbursed by CSAM/DLJ (118,483) (179,786) 81,356(h) (216,913)
Less: Expenses offset by Transfer Agent -- (97) -- (97)
Less: Expenses waived by PFPC -- (1,543) -- (1,543)
-------- ---------- -------- ----------
Total Expenses 75,632 143,227 29,150 248,009
-------- ---------- -------- ----------
Net Investment Income/(Loss) (29,144) 25,877 (29,150) (32,417)
-------- ---------- -------- ----------
Net Realized and Unrealized Gain/(Loss) from Investments:
Net realized gain/(loss) from investments (204,911) 1,589,430 -- 1,384,519
Net change in unrealized appreciation/(depreciation)
from investments 314,679 357,028 -- 671,707
-------- ---------- -------- ----------
Net realized and unrealized gain from
Investments 109,768 1,946,458 -- 2,056,226
-------- ---------- -------- ----------
Net increase in net assets resulting
from operations 80,624 1,972,335 (29,150) 2,023,809
======== ========== ======== ==========
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
Notes to Pro Forma Financial Statements (unaudited)
1. Basis of Combination
The unaudited Pro Forma Combined Statement of Investments, Pro Forma
Combined Statement of Assets and Liabilities and Pro Forma Combined Statement of
Operations give effect to the proposed acquisition of the assets and liabilities
of the DLJ Strategic Growth Fund ("Strategic") by the Warburg Pincus Focus Fund,
Inc. ("Focus"). The proposed acquisition will be accounted for by the method of
accounting for tax-free mergers of investment companies. The acquisition
provides for the transfer of all of the assets of Strategic to Focus in exchange
for Focus Common Class shares, the distribution of such Focus Common Class
shares to Class A, B, C and R shareholders of Strategic, and the subsequent
liquidation of Strategic. The accounting survivor in the proposed acquisition
will be Focus. This is because although Strategic has the same investment
objective as Focus, the surviving fund will invest in a style that is similar to
the way in which Focus is currently operated (including hedging and potential
investment in debt securities). Additionally, Focus has a significantly larger
asset base than Strategic. The costs of the proposed acquisition will be borne
by CSAM.
The pro forma combined statements should be read in conjunction with the
historical financial statements of the constituent fund and the notes thereto
incorporated by reference in this Registration Statement filed on Form N-14.
Focus and Strategic are both, open-end, management investment companies
registered under the Investment Company Act of 1940, as amended.
Pro Forma Adjustments:
The Pro Forma adjustments below reflect the impact of the merger between Focus
and Strategic.
(a) To re-classify Distribution fees from Strategic Class A and R Shares to
Focus Common Shares.
(b) To decrease Distribution fees in Strategic Class B and C Shares from 1.00%
to 0.25% and to re-classify into the Common Class of Focus.
(c) Adjustment based on the contractual agreement with the transfer agent for
the surviving fund.
(d) Adjustment based on the contractual agreements with the custodian for the
surviving fund.
(e) Adjustment based on the contractual agreements with the administrator.
(f) Adjustment based on the contractual agreements with the co-administrator.
(g) Assumes elimination of duplicate charges in combination, and reflects
management's estimates of combined pro-forma operations.
(h) To decrease waiver in order to maintain stated expense cap.
2. Summary of Significant Accounting Policies
Following is a summary of significant accounting policies, which are
consistently followed by Strategic/Focus in the preparation of their financial
statements. The policies are in conformity with generally accepted accounting
principles. Preparation of the financial statements includes the use of
management estimates. Actual results could differ from those estimates.
<PAGE>
Security Valuation - Securities traded on a U.S. or foreign stock
exchange, or the Nasdaq Stock Market Inc. ("Nasdaq") system, are valued at the
last quoted sale price reported as of the close of regular trading on the
exchange the security is traded most extensively. If there is no such sale, the
security is valued at the calculated mean between the last bid and asked price
on the exchange. Securities not traded on an exchange or Nasdaq, but traded in
another over-the-counter market are valued at the average between the current
bid and asked price in such markets. Short-term obligations and commercial paper
are valued at amortized cost, which approximates market. Debt securities (other
than short-term obligations and commercial paper) are valued on the basis of
valuations furnished by a pricing service authorized by the Board of Trustees
(the "Board"), which determines valuations based upon market transactions for
normal, institutional-size trading units of such securities. All other
securities are valued at their fair value as determined in good faith by the
Valuation Committee of the Board.
Security Transactions and Investment Income - Security transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date, and interest income is accrued on a daily basis. Corporate actions,
including dividends, on foreign securities are recorded on the ex-dividend date.
If such information is not available on the ex-dividend date, corporate actions
are recorded as soon as reliable information is available from the Fund's
sources. Realized gains and losses from security transactions are calculated on
an identified cost basis.
Federal Income Taxes - Strategic and Focus intend to qualify for tax
treatment applicable to regulated investment companies under the Internal
Revenue Code of 1986 (the "Code"), as amended, and distribute all of its taxable
income to its shareholders. Therefore, no provision has been recorded for
Federal income or excise taxes.
Distributions to Shareholders - Distributions from net investment income
and net realized capital gains, if any, are declared annually.
<PAGE>
(See Accompanying Notes to the Financial Statements)
THE ANNUAL REPORTS AND STATEMENT OF ADDITIONAL
INFORMATION OF THE ACQUIRING FUND ARE
INCORPORATED BY REFERENCE TO THE MOST
RECENT FILINGS BY THE FUND THEREOF
(INVESTMENT COMPANY ACT FILE NO. 811-08921)
THE ANNUAL REPORTS, PROSPECTUSES AND STATEMENT
OF ADDITIONAL INFORMATION OF THE FUND ARE
INCORPORATED BY REFERENCE TO THE MOST
RECENT FILINGS BY THE FUND THEREOF
(INVESTMENT COMPANY ACT FILE NO. 811-09531)
<PAGE>
PART C
OTHER INFORMATION
Item 15. Indemnification. The response to this item is incorporated by
reference to "Plan of Reorganization" under the caption Proposal Number
1 - Information About the Reorganization" and to "Liability of
Directors" under the caption "Proposal Number 1 - Information on
Shareholders' Rights" in Part A of this Registration Statement.
Item 16. Exhibits
(1) Registrant's Articles of Incorporation are incorporated by reference
to the Registration Statement on Form N-1A filed on August 5, 1998.
(2) By-Laws of the Registrant are incorporated by reference to the
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A filed on August 14, 1998.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization (included as Exhibit A to
Registrant's Prospectus/Proxy Statement contained in Part A of this
Registration Statement).
(5) Not Applicable.
(6) Form of Investment Advisory Agreement is incorporated by reference;
material provisions of this exhibit are substantially similar to
those of the corresponding exhibit in Pre-Effective Amendment No. 1
to the Registration Statement on Form N-1A of Warburg, Pincus
Emerging Markets II Fund, Inc., filed on August 14, 1998 (Securities
Act File No. 333-60677).
(7) Not Applicable.
(8) Not Applicable.
(9) Form of Custodian Agreement with Brown Brothers Harriman & Co. is
incorporated by reference; material provisions of this exhibit
substantially similar to those of the corresponding exhibit in
Pre-Effective Amendment No.1 to the Registration Statement on Form
N-1A of Warburg, Pincus Emerging Markets II Fund, Inc., filed on
August 14, 1998 (Securities Act File No. 33-60677).
(10)(a) Form of Distribution Plan pursuant to Rule 12b-1 under the 1940
Act is incorporated by reference; material provisions of this
exhibit are substantially similar to those of the corresponding
exhibit in Post-Effective Amendment No.2 to the Registration
Statement on Form N-1A of the Warburg, Pincus Long-Short Market
Neutral Fund, Inc., filed on November 2, 1999 (Securities Act File
No. 333-60687).
<PAGE>
(10)(b) Form of Distribution Agreement is incorporated by reference;
material provisions of this exhibit are substantially similar to
those of the corresponding exhibit in Post-Effective Amendment No.2
to the Registration Statement on Form N-1A of Warburg, Pincus
Long-Short Market Neutral Fund, Inc., filed on November 2, 1999
(Securities Act File No. 333-60687).
(10)(c) Form of Services Agreement is incorporated by reference; material
provisions of this exhibit are substantially similar to those of the
corresponding exhibit in Pre-Effective Amendment No.1 to the
Registration Statement on Form N-1A of Warburg, Pincus Emerging
Markets II Fund, Inc., filed on August 14, 1998 (Securities Act File
No. 333-60677).
(10)(d) Form of 18f-3 Plan is incorporated by reference; material
provisions of this exhibit are substantially similar to those of the
corresponding exhibit in Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of Warburg, Pincus Long-Short
Market Neutral Fund, Inc., filed on November 2, 1999 (Securities Act
File No. 333-60687).
(11) Opinion and Consent of Willkie Farr & Gallagher, counsel to
Registrant, with respect to validity of shares.
(12) Opinion of Willkie Farr & Gallagher with respect to tax matters.
(13)(a) Form of Transfer Agency Agreement is incorporated by reference;
material provisions of this exhibit substantially similar to those
of the corresponding exhibit in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of Warburg, Pincus Emerging
Markets II Fund, Inc., filed on August 14, 1998 (Securities Act File
No. 333-60677).
(13)(b) Form of Co-Administration Agreement with Credit Suisse Asset
Management Securities, Inc. is incorporated by reference; material
provisions of this exhibit are substantially similar to those of the
corresponding exhibit in Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of Warburg, Pincus Long-Short
Market Neutral Fund, Inc., filed on November 2, 1999 (Securities Act
File No. 333-60687).
(13)(c) Form of Co-Administration Agreement with PFPC, Inc. is
incorporated by reference; material provisions of this exhibit are
substantially similar to those of the corresponding exhibit in
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A of Warburg, Pincus Emerging Markets II Fund, Inc., filed on
August 14, 1998 (Securities Act File No. 333-60677).
(14)(a) Consent of PricewaterhouseCoopers LLP.
(14)(b) Consent of Ernst & Young LLP.
(15) Not Applicable.
<PAGE>
(16) Powers of Attorney (included on signature page of this Registration
Statement).
(17)(a) Form of Proxy Card (Included as an exhibit to Registrant's
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(17)(b) Registrant's declaration pursuant to Rule 24f-2 is incorporated by
reference to the Registration Statements.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be
deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the Registration Statement and will not be used until
the amendment is effective, and that, in determining any liability
under the Securities Act of 1933, as amended, each post-effective
amendment shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of
them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the registrant, in the City of New York
and State of New York, on the 29th day of December __, 2000.
Warburg, Pincus Focus Fund, Inc.
By: /s/ Eugene L. Podsiadlo
-------------------------------------
Name: Eugene L. Podsiadlo
Title: President
Each person whose signature appears below, hereby makes, constitutes and
appoints each Hal Liebes and Michael A. Pignataro, with full power to act
without the other, as his agent and attorney-in-fact for the purpose of
executing in his name, in his capacity as a Director of the Warburg, Pincus
Fixed Focus Fund, Inc. this registration statement on Form N-14 (including
amendments thereto) to be filed with the United States Securities & Exchange
Commission pursuant to the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William W. Priest Chairman of the Board of Directors December 29, 2000
----------------------------------
William W. Priest
/s/ Eugene L. Podsiadlo President December 29, 2000
----------------------------------
Eugene L. Podsiadlo
/s/ Michael A. Pignataro Treasurer and Chief Financial December 29, 2000
---------------------------------- Officer
Michael A. Pignataro
/s/ Richard H. Francis Director December 29, 2000
----------------------------------
Richard H. Francis
/s/ Jack W. Fritz Director December 29, 2000
----------------------------------
Jack W. Fritz
/s/ James S. Pasman, Jr. Director December 29, 2000
----------------------------------
James S. Pasman, Jr.
/s/ Steven N. Rappaport Director December 29, 2000
----------------------------------
Steven N. Rappaport
/s/ Alexander B. Trowbridge Director December 29, 2000
----------------------------------
Alexander B. Trowbridge
/s/ Jeffrey E. Garten Director December 29, 2000
----------------------------------
Jeffrey E. Garten
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page
-------------- ----------- ----
(4) Agreement and Plan of Reorganization (included as
Exhibit A to Registrant's Prospectus/Proxy Statement
contained in Part A of this Registration Statement).
------------------------------------------------------------------- -----------
11 Opinion and Consent of Willkie Farr & Gallagher,
counsel to the Registrant, with respect to validity
of shares.
----------- ------------------------------------------------------ -----------
12 Opinion and Consent of Willkie Farr & Gallagher
with respect to tax matters.
----------- ------------------------------------------------------ -----------
14(a) Consent of PricewaterhouseCoopers LLP
----------- ------------------------------------------------------ -----------
14(b) Consent of Ernst & Young LLP
----------- ------------------------------------------------------ -----------
16 Powers of Attorney (included on signature page of this
registration statement).
----------- ------------------------------------------------------ -----------
17(a) Form of Proxy Card (included as an exhibit to
Registrant's Prospectus/Proxy Statement contained in
Part A of this Registration Statement).
----------- ------------------------------------------------------ -----------
[to be completed - S&C]
